General

On January 2, 2023 local time, the Regional Comprehensive Economic Partnership Agreement (RCEP) officially entered into force for Indonesia. As a supporting measure of the agreement, the Indonesian government has also promulgated a new regulation on the origin of goods and the issuance of documents of origin for locally exported goods, aiming to help international trade enterprises better profit from RCEP. This regulation came into force simultaneously on January 2 local time.

Shi Ziming, Minister Counsellor of the Chinese Embassy in Indonesia, said: "RCEP has made a high-level commitment to opening up investment in five non service industries, including manufacturing, agriculture, forestry, fishery and mining, in the negative list model, providing institutional guarantees for e-commerce cooperation and cross-border e-commerce, which are key areas of China's investment in Indonesia. The rules of origin accumulated in the region not only help large enterprises to give play to the comparative advantages of different countries in the region, optimize the industrial layout, and enhance overall competition Small and medium-sized enterprises can also rely on their own advantages to make flexible decisions and tap more business opportunities. RCEP has defined investment protection, investment promotion, investment facilitation and other measures to enhance the transparency of investment policies, which will further improve the business environment for Chinese enterprises to develop in Indonesia. "

Zhang Chaoyang, President of the Federation of Indonesian Chambers of Commerce, said: "The effective implementation of RCEP in Indonesia is an important step to promote the comprehensive implementation of RCEP, which will inject new impetus into the development of regional economic integration, regional and global economic growth, and further promote the development of regional industrial chain supply chain cooperation."

Benefiting Chinese and Indonesian enterprises

On the effective date, local customs issued the first certificate of origin of RCEP to Indonesia for local international trade export enterprises to help enterprises export: Lianglu Cuntan Customs under Chongqing Customs issued the certificate of origin of RCEP for a batch of impact rammers exported to Indonesia by Chongqing Kaibao Power Machinery Co., Ltd., with the visa amount exceeding 450000 yuan. With this certificate, this batch of goods can enjoy zero tariff preference in Indonesia; Nantong Customs under Nanjing Customs issued a RCEP certificate of origin for a batch of aspartame exported to Indonesia by Nantong Changhai Food Additive Co., Ltd. with a value of 117800 dollars. With this certificate of origin, the company can enjoy tariff reduction and exemption of about 42000 yuan for this batch of goods

"After RCEP takes effect in Indonesia, Indonesia can also enjoy certain import tax reduction and exemption for its imports from China," said an insider who has long been concerned about China Indonesia economic and trade relations.

For example, the insiders of the industry, the import tax reduction of steel products is particularly large, with the reduction rate reaching 12.5% - 20%. After the reduction and exemption of import tax, Indonesian local import enterprises, whether state-owned engineering construction units or private enterprise trading companies, only need to pay 11% value-added tax and 2.5% import value-added tax. At the same time, the competitive advantages of China's steel industry plus the advantages of import tax reduction and exemption, Indonesia is bound to increase the use of Chinese steel in the future "the Belt and Road" project, thus promoting the export of Chinese steel products.

"In Alibaba International Station, Indonesia is the fastest growing buyer in RCEP countries. In December 2022, the number of Indonesian buyers in Alibaba International Station ranked eighth in the world and first in RCEP countries, which shows that Indonesia has a large demand for Chinese supply." Su Changrong, national manager of Alibaba International Station in Singapore, Malaysia and Indonesia, introduced that the effectiveness of RCEP for Indonesia also provides more opportunities for Indonesian products to enter the Chinese market. There are about 30000 small and medium-sized enterprises in Indonesia's international trade, and currently there are about 170 gold medal suppliers in Ali International Station. With the official entry into force of RCEP in Indonesia, Alibaba International Station will use the benefits released by the agreement to invest more channel managers in the Indonesian market, further expand the number of suppliers, and strive to expand to 1000 in the next two to three years, so that Chinese consumers can buy more high-quality Indonesian products with characteristics.

Expand new space for cooperation

Indonesia is the largest archipelago country in the world and the only G20 member of ASEAN. Its population, area and economic volume all account for about 40% of ASEAN. Indonesia is also the initiator of the "21st Century Maritime Silk Road".

In recent years, under the strategic leadership of the two heads of state, China Indonesia relations have flourished, and the importance of bilateral partnership and cooperation has become increasingly prominent.   In this context, the two countries have aligned the "the Belt and Road" initiative and the concept of "global maritime fulcrum" to jointly build a community of shared future between China and Indonesia. The "four wheel drive" cooperation pattern of political, economic, people to people and maritime cooperation has been deepening, setting a model of joint self-improvement, mutual benefit and win-win for developing major countries.

In 2022, China Indonesia economic and trade cooperation will make new progress: from January to November, the bilateral trade volume will reach 136 million US dollars, with a year-on-year growth of 22.6%. In the first three quarters, China's direct investment in Indonesia reached 5.19 billion US dollars, a year-on-year increase of 128%. China continues to become Indonesia's largest trading partner, source of imports and export market.

"With the goal of a comprehensive, modern, high-quality and inclusive free trade agreement, RCEP creates more opportunities for countries including Indonesia to participate in the regional market, and is of great significance to break the bottleneck of bilateral and multilateral economic and trade cooperation, and consolidate, deepen and expand new cooperation space in international trade," said Zhang Chaoyang.

In the future, in order to enable Chinese and Indonesian enterprises to continue to benefit from the RCEP dividend, Zhang Chaoyang suggested that relevant enterprises should do the following five things well: first, carefully study the preferential tax rate of the Free Trade Agreement, and accurately select the target market of the target country for their main export products; The second is to strengthen the business strategic planning and strategic planning, and optimize the investment layout according to the tax reduction of RCEP and the enterprise advantages; The third is to benchmark the international high standards and improve the ability of foreign investment; Fourth, make preparations for long-term development, improve localization, strengthen cultural integration, and maximize the development benefits of RCEP agreement for international trade enterprises; Fifthly, enterprises can make full use of the policy advantages of bilateral local currency settlement (LCS) and enjoy the convenience of bilateral trade settlement.