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Bilateral preferential trade agreement: not for every partner (case study: Indonesia and Serbia)
Preferential Trade Agreements (PTAs) are important instruments for Indonesia to expand market access, enhance industrial competitiveness, and promote investment. This study examines the potential benefits of Indonesia–Serbia economic cooperation by considering the economic, political, and societal factors influencing trade negotiations. Using the scenario planning methodology, it compares two policy alternatives: a PTA and an Investment Promotion and Protection Agreement (IPPA). The analysis suggests that although a PTA could generate economic benefits for both countries, Indonesia may gain less than Serbia. Alternatively, an IPPA could offer greater benefits to Indonesia through two strategic options: relocating Indonesian firms to Serbia to establish a regional hub for accessing the European Union market, and investing in Serbian companies as a gateway to the wider regional market. This study highlights the importance of selecting appropriate economic cooperation instruments to maximize Indonesia’s benefits from regional economic integration.
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