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Indonesia-Malaysia Renew Border Trade Agreement

Putrajaya – Indonesian Trade Minister Zulkifli Hasan and Malaysian Investment, Trade and Industry Minister Tengku Zafrul Aziz signed the renewal of the Indonesia-Malaysia Border Trade Agreement (BTA) in Kuala Lumpur, Malaysia, on Thursday (8/6).

Since the BTA first came into force on August 24, 1970, the BTA has been renewed in consideration of the latest conditions and changes, including meeting the needs of the community, regulating mechanisms, and increasing supervision of its implementation.

The first review of the BTA was conducted on July 21-22, 2009 in Bandung, until finally reaching an agreement in substance at the 8th meeting on March 21, 2022.

The signing was carried out at Perdana Putra, Putrajaya, and witnessed directly by Indonesian President Joko Widodo and Malaysian Prime Minister Anwar Ibrahim. Both countries welcomed the signing of this agreement which is expected to provide great benefits for the people of the two countries who live in border areas.

“Indonesian citizens living on the RI-Malaysia border are an inseparable part of this country. Therefore, the President is very pleased with the completion of the BTA renewal which is expected to help fulfill the needs of our citizens living on the border,” said Trade Minister Zulkifli Hasan.

Going forward, the follow-up to the completion of this agreement requires attention, especially in terms of ratification, socialization, and supervision of its implementation. For this reason, good cooperation between the central government and local governments is needed.

“After the enactment of this update, it is necessary to socialize it to the border communities so that they can understand and make good use of it. In addition, all levels of stakeholders are expected to jointly supervise its implementation. I hope that the central and regional governments can synergize in both matters,” added Trade Minister Zulkifli Hasan.

Meanwhile, Director General of International Trade Negotiations of the Ministry of Trade Djatmiko Bris Witjaksono stated that the BTA is different from forms of trade cooperation such as the Free Trade Agreement, although both countries are members of ASEAN which should apply zero percent duties.

“Factually, if we are only limited to looking within the framework of the ASEAN scheme, then the import duty on goods from Indonesia-Malaysia should be zero percent.However, the BTA provides several exceptions to the export and import provisions with the aim of not burdening our people at the border,” said Djatmiko.

After the signing, the two countries will continue the ratification process in accordance with the applicable provisions in each country before the BTA is enacted and can facilitate the people at the border.

Indonesia-Malaysia Trade Overview
In January-March 2023, the total trade between Indonesia and Malaysia reached USD 6.14 billion. Meanwhile, the total trade between the two countries in 2022 reached USD 27.8 billion. There was an increase in total trade of 30.37 percent compared to 2021. During 2022, Indonesia’s exports were recorded at USD 15.4 billion and Indonesia’s imports at USD 12.4 billion. Indonesia recorded a surplus of USD 2.9 billion against Malaysia.

Indonesia’s main export commodities to Malaysia are coal; palm oil; petroleum; industrial monocarboxylic fatty acids. Meanwhile, Indonesia’s main import commodities from Malaysia are petroleum; acyclic hydrocarbons; polymers; machinery and mechanical equipment, and acyclic alcohols.

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