The Hungarian - Indonesian economic relations

Indonesia is considered as one of the mayor economic partners for Hungary in the Southeast-Asian region. The bilateral trade relations were negatively affected by the economic and financial crisis erupted in the late 90’s in Indonesia.

The Joint Commission on Bilateral Economic Cooperation (JCEC) was established in 1988, however after three sessions the body halted its function after its last session in 1993. In the course of the Indonesian President’s visit to Hungary in 2002, September the restarting of functioning the JCEC was agreed upon. The next session of the JCEC was held in Jakarta in January, 2004 (the Hungarian delegation was headed by HE Kálmán Kovács, Minister of Informatics and Telecommunication, the Indonesian delegation was headed by HE Hatta Rajasa, then State Minister for Research and Development). In the course of the Session the Hungarian Chamber of Commerce and Industry and the Indonesian Chamber of Commerce and Industry established the Joint Business Council (JBC). In March 2005, HE János Kóka, Minister of Economy and Transport headed a delegation to Indonesia. In July 2005 HE Ferenc Gyurcsány, Prime Minister of Hungary lead official delegation (including HE Janos Kóka) to Indonesia. Pursuant to the then newly concluded Agreement between the Government of the Republic of Indonesia and the Government of the Republic of Hungary on Economic Co-operation, the two Sides re-established the Indonesian-Hungarian Joint Commission on Economic Co-operation.The first Session of the new JCEC was held in Budapest in October, 2005. (the Hungarian delegation was headed by HE Kálmán Kovács, Minister of Informatics and Telecommunication, the Indonesian delegation was headed by HE Hassan Wirayuda, Minister for Foreign Affairs). HE Sofyan Djalil, Ministre for Information and Communication paid official visit to Hungary in 2006. In the current year HE Mrs Katalin Szili, Speaker of the Hungarian Parliament headed a parliamentary delegation to Indonesia in March, and HE Mari E.Pangestu, Minister of Trade of the REI visited Hungary in June, heading a business delegation. HE Laszló Sólyom, President of the Republic of Hungary is to make his state visit to Indonesia in May, 2008.

The Indonesian products enjoy preferential tariff privileges on the Hungarian market in accordance with the EU GSP system.

Major bilateral economic agreements

Agreement on Economic Cooperation (2005), Framework-agreement between the Central Banks (1994), Agreement on the Avoidance of Double Taxation (1993), Agreement on the Protection of Investments (2003). Due to its economic nature we have to mention the Technical Cooperation Agreement concluded in 2004 between the Directorate General of Aquaculture (Ministry of Marine Affairs and Fisheries) and the Hungarian Research Institute for Fisheries, Aquaculture and Irrigation (HAKI).

Trade relations

The bilateral trade grew from the level of 37 million USD in 1993 to 216 million in 2003. In 2007 the bilateral trade was lower, the Indonesian export to Hungary was USD 93,6 million, the import from Hungary was USD 21,3 million. These figures represents increased exports from Hungary, and also increase of imports from Indonesia in comparision with the previous year data.

Both in the export and import the volume of electrical, electronic products is dominant. The range of Indonesian goods exported to Hungary includes rubber, rubber products, textile, footwear products palm-oil, spices, leather, rattan, plastic products and other handicraft goods. Hungarian companies export mainly pharmaceutical products, chemicals, electric, electronic and optical products, certain power engineering equipments and machinery items.

The Hungarian Government offered a Tied-aid Credit Facility to the Indonesian Government after the tsunami, in March, 2005. Bilateral negotiations on this subject have not been concluded so far. The Hungarian Government has recently offered a new proposal in amount of USD 10 Million and expect the response of the Indonesian Side.

Indonesian exporters are represented int he AsiaCenter Budapest, the Indonesia Pacilion promotes the goods of some 40 Indonesian companies.

Hungarian companies with an interest in the Indonesia market extend commercial activity in certain government related services (supply of equipments and technology for the Indonesian power-generating, electricity sector). Hungarian technologies are offered in the field of e-education, communication softwares, radar-modernization, forest fire prevention, waste management (including hospital waste management), water treatment, health and e-government. The Hungarian companies are offering agrarian technologies as well (high yield corn production, animal husbandry, storing facilities, fishery projects etc.) Beside of the above certain consumer goods, food and beverages, computer and telecommunications software and services, building and construction technologies and tourism are the other sectors where Hungary is offering partnership. Hungary offered the production of the effective serum against the deadly bird-flue virus (H5N1) in 2006 and is expecting response from the Indonesian Government in this issue . Hungarian companies are planning investment in Indonesia int he palm-oil sector, plan to make research cooperation int he bio-fuel sector.

There are three Hungarian companies registered and operating in Indonesia (Transelektro, Diagon, Hungarindo), and the forth one is about to be registered in these days (trade and investment profiles). More Hungarian companies eye Indonesia with investment purposes.

Trade between Hungary and Indonesia

(value: million USD)