The Asian economic and social crisis of 1997 had a great impact on Indonesia’s commercial relations with Italy. Only by late 1999 did our total export level show sings of recovery, and it has continued to increase in the following years.
The bilateral commercial trade reflects a steady increase in Indonesian exports to Italy and parallel decrease in the Italian exports to Indonesia. For the period January-October 2006, Italian exports to Indonesia amounted to $453 milion, with a slight decline of the market share (from 1% in 2005 to 0,9% in 2006). Italy ranks 18th within export countries towards Indonesia and 4th within the EU, after Germany, France and Sweden. Main Italian exports are industrial equipment (35%), civil engineering and contractor plant & equipment (4%), heating and cooling equipment (3%), leather (3%), pulp and paper machinery (3%), others (52%).
During the same period, Italian imports amounted at $1,011 milion, with a variation of 20% compared to the same period in 2005. Italy keeps its 17th position in the rank of Indonesian export markets, with a market share of 1.2%. Main imports are coal (23,4%), footwear (7,6%), textile (8,4%), vegetable fats (6,7%), furniture (5%), pulp & paper (4,7%), natural rubber (3,9%), sugar confectionery (2,8%), wood manufactures (2,5%), others (35%).
In foreign investments, Italy does not traditionally appear among the main Indonesian business partners. The main productive presence at the moment is ENI (oil and gas company), Perfetti (a confectionery company), OCRIM (flour milling), Coeclerici (shipping), IVECO (trucks). Perfetti opened a factory in Indonesia in 1997 and mainly produces for the local market.
Italian companies have recently increased their presence and interests in the energy sector. Indonesia energy resources are rich and varied (oil, gas, geothermic and alternative resources); however, due to the outdated investment in the local production, transfer and distribution systems of power, there are interesting opportunities for foreign investment in this sector. Indonesian regulations allow a greater foreign presence both in the upstream (extraction) and in the downstream (refinement) sectors. ENI has also returned to Indonesia through the acquisition of companies operating in gas and oil exploration and extraction. ANSALDO and SAIPEM also confirm the attractive investment climate in the country. Also relevant is the recent interest of Fiat Cars and Piaggio in the Indonesian market, initially through imports, with a prospect of assembling vehicles in the country.
Italian supply and communications companies have also shown interest in Indonesia. In September 2005, Telecom Italia Spa and TeleKom Indonesia signed an agreement for the management of fixed telephone traffic, for toll free services and for programs in transfer of technology.
There is an ICE (Italian Trade Commission) office in Jakarta (whose representative resides in Singapore since June 2004), while Italian businessmen are associated in the “Italian Business Association in Indonesia-IBAI”, which also actively involves Indonesian entrepreneurs.
The main field for Italian exports is in instrumental mechanics, particularly tool machinery, textile machinery, stone and marble product machinery, ceramics machinery, wood, glass, footwear, packing, and food products machinery. Other sectors of interest are furniture and chemical-pharmaceutical products. Prospects in the oil and gas sector, both upstream and downstream, remain of high interest. Italy also has interesting prospects in the food sector, including catering, restaurants and hotels, as well as in the retail sector, which has recorded meaningful growth in recent years.
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credits | F.A.Q.