03/11/2011 (Jakarta Post) - Businesspeople from the UK expect to strengthen commercial links with their counterparts in Indonesia as both bilateral trade and investments are still below their potential, leaving enormous room for growth, a business representative says.

Edward Oakden, managing director of UK Trade&Investment, said on Tuesday that Indonesia, which currently enjoyed stellar economic performance and a growing middle class, would likely become the UK’s strategic partner in the next 10 to 20 years.

“We want to look at how we build up our relationships because we see Indonesia over the next 10 to 20 years as becoming one of our important partners in Southeast Asia and the world. You have become the third-largest democracy and the largest economy in Southeast Asia. We want to be a strategic partner with you,” he told The Jakarta Post after meeting Trade Ministry officials.

Oakden is part of a UK business delegation led by Vince Cable, Secretary of State for Business, Innovation and Skills, who visited Indonesia on Monday and Tuesday to explore ways to initiate new partnerships in education and infrastructure as well as expanding trade.

Cable was slated to witness the launch of the UK ASEAN Business Council on Tuesday evening and meet several Indonesian ministers and government officials as well as UK and Indonesian businesses.

Trade Ministry Director General for International Trade Cooperation Gusmardi Bustami said that during the meeting, Indonesia and the UK signed a memorandum of understanding on trade talks terms of reference to address various issues necessary to boosting trade and investment between the two countries.

“This is the first meeting ... and I think we have the same spirit and positive engagement,” he said after the meeting.

He said Indonesia raised several issues in the meeting including the Indonesian Sustainable Palm Oil (ISPO) certification and requirements from the UK authority to clarify the chemical content of imported products in line with its Registration, Evaluation, Authorization and Restriction of Chemicals (REACH) scheme, which hampered exports of some Indonesian goods.

“They responded positively to our ISPO scheme, which we consider in line with international standards, and we asked them to support us to introduce this to their market,” he said, adding that the UK was also willing to give technical assistance to Indonesian manufacturers to understand and apply standards in line with REACH.

On the UK’s side, Gusmardi added, the business representatives addressed several issues such as the 75 percent foreign ownership cap in pharmaceutical companies in Indonesia and different excise duties on domestically produced and imported alcohol products.

“They hoped that we would remove the cap and lift it from our negative investment lists as they felt that pharmaceutical firms were research-based firms, which should be protected in the long term due to intellectual property rights,” he said.

Gusmardi said both countries would meet for the second talk next year, but the time frame and location had yet to be determined.

In the first nine months of 2011, investments from UK firms totaled US$349.6 billion. The total volume of bilateral trade between the two countries rose by 8.25 percent to $1.68 billion during the first half of this year, up from the same period last year, with Indonesian exports increasing by 0.5 percent to $996.8 million and imported products and services from the UK up 21.9 percent to $686.2 million.