Hong Kong could be Indonesian trade hub

More competitive pricing one edge for Indonesian manufacturers.

Hong Kong could play a strategic role as a hub of both trade and investment for Indonesian business firms. Hong Kong Trade Development Council (HKTDC) deputy executive director Margaret Fong said Hong Kong’s close economic partnership arrangement with China has eliminated import duties on a wider range of products covered by the ASEAN-China free trade agreement (ACFTA).

She said this will allow Indonesian manufacturers to enjoy more competitive pricing of their products through cost efficiency by exporting through Hong Kong.

“Generally this can be done through value-added services in Hong Kong because if you create more value there and reach 30 percent as required by the rules of origin, you won’t pay any tariffs,” she said.

“That means, many of your products that at this point don’t qualify, will qualify if they come through Hong Kong.”

Business opportunities for Indonesian exporters are in food and agricultural products, houseware, handicraft and other consumer goods with strong brands. Hong Kong companies might re-package or distribute Indonesian exports to reach Chinese consumers.

Apart from becoming an Indonesian export hub, Hong Kong is the ideal place for Indonesian firms wanting to set up its subsidiaries to target China, as they can control the majority stake in the firms, which cannot be done in China.

Hong Kong’s merchandise exports to Indonesia settled hit HK$335 million last year. These consisted of textile yarn, fabrics, made-up articles, metal ores and scrap, essential oils, resinoids, perfume materials, toiletries, polishes and cleansing preparations.

Its merchandise re-exports were valued at HK$22.9 billion and consisted of telecommunications and sound equipment, textile yarn, fabrics and made-up, office machines and automatic data processing machines.

Hong Kong imported HK$22.9 billion in goods and commodities from Indonesia during the year, mainly coal, coke and briquettes, edible products, electrical machinery, apparatus and appliances and electrical parts.