The leaders of Indonesia and Iran on Tuesday signed a preferential trade agreement to expand economic relations during an official visit by Iranian President Ebrahim Raisi to Jakarta.
Indonesian President Joko Widodo, speaking after the signing as streamed online by his cabinet secretariat, hoped the agreement “would increase trade between Indonesia and Iran” but did not provide details.
After signing 10 agreements at the Bogor Presidential Palace in Bogor, West Java, Widodo told media he hoped the PTA would increase transactions between Indonesia and Iran, reported AFP.
The agreement would give Indonesia greater access to Iranian markets, particularly with regard to its exports of vegetable oil, cocoa, coffee and tobacco, said the Indonesian Trade Ministry.
For his part, Raisi, who is on his first official visit to the archipelago nation, said that Iran and Indonesia have decided to increase their annual trade ties to $20 billion while seeking to use national currencies to settle trade payments.
“We believe that sanctions and threats cannot stop us in any way from cooperation and communication with neighboring countries, Muslim nations and countries that are aligned with us,” Raisi said.
Indonesian trade ministry official Djatmiko Bris Witjaksono said on Tuesday the two countries had agreed on a “countertrade” scheme in which goods and services can be exchanged “without being constrained by scarcity or currency difficulties.”
Two-way trade between the nations currently amounts to around $250 million, with the Southeast Asian country recording about a $200 million surplus, according to the Indonesian trade ministry.
Djatmiko told reporters on Monday Indonesia is keen to boost trade with the Middle East and the surrounding region.
“Iran could be a gateway to the surrounding region, such as Central Asia ... or even to Türkiye because we do not have any trade deal with Türkiye yet,” he said.
Under Tuesday's agreement, Iran would give Indonesia greater access to products like processed food and pharmaceuticals, textile, palm oil, coffee and tea, while Indonesia will lower tariffs for Iran's oil and chemical products, metals and some dairy products.
Raisi's visit comes as ties between Iran and the West have become increasingly strained following the Iranian security forces' violent crackdown on protests against the country's clerical elite after the death of a Kurdish woman in custody of the morality police last year.
Several countries, including the US, have imposed broad sanctions on Iran over its nuclear program and alleged rights violations.
This week, the EU imposed the eighth round of sanctions over Tehran's brutal crackdown on protests over the death of Mahsa Amini.
Trade between Indonesia and Iran dropped from $715.5 million to $141.6 million in 2019 after the US imposed its sanctions.