Kenya, Indonesia to sign preferential trade agreement

Kenya, Indonesia signing of a bilateral agreement

Indonesia’s President Joko Widodo (behind left) and his Kenyan host William Ruto (behind right) witness the signing of a bilateral agreement by Energy and Petroleum Cabinet Secretary Davis Chirchir (seated right) and his Indonesian counterpart Arifin Tasrif (seated left) following talks held at State House in Nairobi on Monday, August 21. 

Photo credit: Dennis Onsongo | Nation Media Group

Kenya and Indonesia yesterday signed four bilateral agreements on food security, mining, renewable energy and health following talks between President William Ruto and Indonesia’s Joko Widodo.

Mr Widodo, who is the first Indonesian President to visit Kenya, was honoured with a 21-gun salute at State House in Nairobi, where he was welcomed by Dr Ruto and Deputy President Rigathi Gachagua.

Mr Widodo is on his first visit to Africa, which will also take him to Tanzania, Mozambique and South Africa, where he will attend the Brics (Brazil, Russia, India, China, and South Africa)summit in Johannesburg this week.

After a closed-door meeting between the two presidents that lasted about an hour, Dr Ruto announced the scrapping of visa requirements for Indonesians travelling to Kenya, saying, “nobody should need a visa to go home”.

"Kenya is open for business. An important step in this direction must continue to be the easing and gradual removal of visa restrictions between our two nations. For our part, Kenya has decided to extend visa-free entry not only to diplomatic passport holders," said Dr Ruto.

During the visit, the Ministry of Energy and Petroleum signed a Memorandum of Understanding with Indonesia's Ministry of Energy and Mineral Resources that will facilitate investment in geothermal energy production, transmission and distribution.

The Pharmacy and Poisons Board (PPB) also signed an MoU with Indonesia's Food and Drug Authority that will facilitate the strengthening, promotion, development and implementation of regulatory cooperation on pharmaceutical products.

Dr Ruto also witnessed the signing of an agreement between local vaccine manufacturer Kenya BioVax Institute and Indonesia's BioFarma for cooperation in technology transfer, contract manufacturing, registration, supply and marketing of a portfolio of vaccines to be manufactured by BioFarma in Kenya. The two leaders also signed a cooperation agreement in mining and geology, which will include joint studies, knowledge sharing and capacity building. They also discussed trade and investment, and cooperation in higher and basic education and vaccine development.

Dr Ruto revealed that the two countries are finalising details of a possible Preferential Trade Agreement (PTA) to boost trade volumes between Nairobi and Jakarta. Kenya and Indonesia have also signed a memorandum of understanding (MoU) to strengthen cooperation in promoting investment flows between the two countries.

According to the Observatory of Economic Complexity (OEC), trade between Nairobi and Jakarta is about $598.1 million (Sh86.36 billion) annually and is expected to continue growing in the coming years as demand for goods and services increases.

"We also discussed the importance of concluding a bilateral investment treaty that will provide a stable and predictable investment environment, which is a prerequisite for accelerated private sector investment. We have tasked our joint teams to complete the drafting of this instrument within the next 90 days," he said.

Indonesia enjoys an overwhelmingly positive trade balance with Kenya, with the Southeast Asian country set to export $580 million (Sh83.75 billion) worth of goods to Nairobi by 2021, with palm oil as the main export. The country's exports to Kenya, which include hot-rolled iron bars and stearic acid, have grown at an annualised rate of 14.5 per cent over the past 26 years as local demand for cooking oil continues to rise.

Kenya, on the other hand, exported a paltry $18.1 million (Sh2.61 billion) worth of goods to Jakarta in 2021, with coffee beans, tea and tanned sheepskins topping the export list.

Following the bilateral talks, government officials launched the Mama Pima edible oil project in Nairobi. The project is a partnership between the Kenyan and Indonesian governments and aims to provide mobile cooking oil dispensers to traders.

Indonesia is the second largest exporter of crude palm oil to Kenya after Malaysia.

"This visit reaffirms the strong bonds of friendship between our nations and demonstrates our interest in deepening and strengthening our partnership so that we can prosper now and in the future," said the President.