(Bloomberg) --
Indonesia will seek to sign $3.5 billion of trade and investment agreements with Africa as global trade battles spur a hunt for new markets outside Asia, according to a senior diplomat.
The deals will be announced at the ongoing Indonesia-Africa Forum, which will be held until Tuesday in Bali, Vice Foreign Affairs Minister Pahala Mansury said in an interview last week. The targeted haul is much bigger than the roughly $600 million in deals signed in 2018, when the inaugural meeting was held, he said.
Indonesian utility PT Perusahaan Listrik Negara and Tanzania Electric Supply Co. Ltd. will work together to develop geothermal energy, while PT Bio Farma and Ghana’s Atlantic Lifesciences Ltd. agreed to cooperate on health technology transfer, the foreign affairs ministry said in a Sunday statement. Congo and Senegal may also purchase and maintain aircraft from PT Dirgantara Indonesia, it said.
Meanwhile, PT Pertamina’s President Director Nicke Widyawati said the company was studying opportunities with Guma Group Ltd. to build a power plant in South Africa, with gas supplied from Mozambique, according to a report by local media outlet Bisnis.
Indonesia has long been looking to diversify trade beyond its major partners like China, the US and Japan. That search is taking on greater urgency as a struggling Chinese economy, weak commodity prices and increasing protectionism pose headwinds for the country’s export sector.
Kenya, Nigeria, South Africa and Egypt, in particular, have fast-growing populations that could be promising export markets for Southeast Asia’s largest economy, according to Mansury, adding that the foreign affairs ministry is pushing for better market access for Indonesian commodities. Africa accounted for just $6.9 billion of Indonesia’s exports in 2023, less than 3% of total shipments.
Resource-rich Africa will also be a key player in Indonesia’s ambitions to use its vast reserves of nickel to become a production hub for batteries. Indonesian President Joko Widodo said in a statement on Monday that the government is finalizing a partnership with Zimbabwe on lithium mining.
“Indonesia will need to work with Africa because not all of the critical minerals that are required to produce battery materials are available in Indonesia” Mansury said, citing other examples like cobalt and graphite. Talks are still exploratory, pending geophysical survey results, he added.
As the likes of the US and the European Union wield tariffs on China-made electric vehicles, scuppering carmakers’ production plans, Indonesia and Africa can work together to create a stronger global supply chain for batteries, according to the diplomat.
“Amid geopolitical tensions between economic superpowers, this is a very good opportunity for Global South countries to work together rather than treat each other as a competitor,” he said.
--With assistance from Eddie Spence.
(Updates with details of some agreements)
©2024 Bloomberg L.P.
