LABUAN, Nov 12 — The economic partnership between Indonesia and Malaysia is consistently advancing, marking a significant strengthening of bilateral ties, said Indonesian Ambassador to Malaysia Datuk Hermono.

He said the bilateral trade value between Indonesia and Malaysia in 2022 stood at US$28.5 billion. (RM133 billion)

However, Hermono said he was concerned that this figure might decrease significantly by 20-30 per cent due to a noticeable drop in commodity prices, particularly in coal, Indonesia’s largest export to Malaysia, followed by crude palm oil.

"We anticipate a reduction of approximately US$7 billion in trade value with Malaysia this year.

"As of September 2023, the recorded trade value was US$17.5 billion, and he estimated it to reach approximately US$22 billion by the end of the year,” he said in an interview with Bernama after the Indonesia’s Consulate General Meeting at Tiara Hotel Labuan here today.

He said that despite challenges in the trade sector, the tourism industry appears to be thriving.

"Malaysia is leading the way in terms of visitor numbers to Indonesia, surpassing China, India, and Singapore.

"Post-Covid-19, Indonesia has experienced a surge in Malaysian tourists, reaching around 700,000, similar to the number of Indonesian tourists visiting Malaysia.

"Before the pandemic, Malaysia annually contributed around 2.5 million tourists to Indonesia,” he said.

Hermono highlighted positive developments in the economic landscape, citing the relocation of Indonesia’s capital from Jakarta to Nusantara in East Kalimantan.

He said the relocation is expected to stimulate economic spillover to Sabah and Sarawak when the capital is relocated.

"Currently, the ongoing development projects at the Nusantara provide new business opportunities for Malaysian investors in the various construction projects like hotels, hospitals, and supporting facilities, among others,” he said.

While the Indonesian economy is on an upward trajectory, with a focus on digital transformation, Hermono acknowledged that Indonesia’s upcoming elections in February 2024 have led to a wait-and-see approach from foreign investors on future investments.

"Strengthening economic bilateral ties remains a top priority for President Jokowi Widodo, reflecting the commitment to fostering a robust partnership between Indonesia and Malaysia,” he added. — Bernama