KENYA- INDONESIA TRADE BRIEF Prepared BY EXPORT PROMOTION COUNCIL OCTOBER, 2012
TABLE OF CONTENTS EXECUTIVE SUMMARY... 1 1.0 BACKGROUND... 2 2.0 KEY ECONOMIC INDICATORS OF KENYA... 3 2.1 Kenya: Country Profile... 3 3.0 KENYA S FOREIGN TRADE- AN OVERVIEW... 5 3.1. Balance of Trade... 5 3.2. Kenya s Export Composition... 5 3.3. Geographical Distribution... 7 3.4. Kenya s Imports of Merchandise... 8 4.0 KENYA S BILATERAL TRADE WITH INDONESIA... 10 4.1. Kenya s -Indonesia bilateral trade... 10 4.2. Kenya s Exports to Indonesia... 10 4.3. Kenya s Imports from Indonesia... 11 4.4. Export Potential Products to Indonesia... 12 5.0 CONCLUSION AND RECOMMENDATIONS... 13 LIST OF FIGURES: Figure 1: Kenya s Trade Balance 2007-2011... 5 Figure 2: Proportion of Kenya s Merchandised Exports in 2011... 6 Figure 3: Proportion of Exports by Region in 2011... 8 Figure 4: Proportion of Imports by Country in 2011... 9 LIST OF TABLES: Table 1: Proportion of Commodity Exports, 2007-2011 (%)... 6 Table 2: Value of Merchandise Exports by Region in US $ Millions (2007-2011). 7 Table 3: Value of Imports by Country 2007-2011... 9 Table 3: Kenya s Trade with Indonesia... 10 Table 4: Kenya s Exports to Indonesia... 10 Table 5: Kenya s Imports from Indonesia... 11 Table 6: Potential Exports to Indonesia... 12 ii
EXECUTIVE SUMMARY Kenya is the largest economy in the East African region, and strategically located on the eastern coast of Africa making her the gateway for trade to land locked EAC countries, Mombasa being the most important port. Nairobi is also becoming the regional hub for air transport, serving major markets like Europe, Middle East and other African countries. It enjoys extensive infrastructure, and is the regional hub for trade and finance in East Africa. Trade has expanded substantially since the introduction of liberalization reforms, with exports increasing from US $ 3.50 billion in the year 2006 to US $ 5.2 billion in 2010 registering an annual average growth of 12.4%. However, Kenya s overall trade imbalance continues to widen, with imports rising from US $ 7.23 billion in the year 2006 to US $ 12 billion in the year 2010 registering an annual average of 17.9%. The upward trend in export growth is to be maintained under the country s Vision 2030 policy framework, in which trade sector is expected to contribute significantly towards the attainment of economic growth target of 10% in the planning horizon. The main exports remains dominated by primary commodities including horticulture, tea, articles of apparels & clothing, soda ash, coffee, iron & steel, which together account for over 60% of total exports. The bi-lateral trade between Kenya and Indonesia is heavily in favour of Indonesia, with the trade balance rising from US $ 272.6 million in 2007 to US $ 327.3 million in 2009 and US $ 491.4 million in 2011. Kenya s exports to Indonesia amounted to US $ 24.9 million and accounted for only 0.4 per cent of Kenya s total exports in 2011. The exports to Indonesia fluctuated over the period between 2007 and 2011 and the export products included soda ash, black tea, tobacco and products, sheep skin leather and dried leguminous vegetables. Imports from Indonesia amounted to US $ 516.3 million in 2011 and accounted for 3.4 per cent of Kenya s total imports. The main import products comprise among others: crude palm oil, industrial chemicals, refrigerator, yarns, natural rubber and paper and paperboard. To bridge the trade gap between Kenya and Indonesia, there is need for Kenya to expand products currently exported into this market and also diversify product range through promotion of other products where Kenya has a supply capability but their presence in Indonesian market is minimal. In addition, there is need for Kenya to carry out market studies in the Indonesian market with a view to undertaking appropriate adaptation and development of the products for Indonesian market; and also to organize trade fairs & exhibitions in Indonesia to facilitate entry of new products into Indonesian market. The Government of the Republic of Indonesia to consider favourable trade terms for Kenya s products 1
1.0 BACKGROUND The Republic of Kenya with a geographical area of 582,650 sq. km, and GDP of US $ 57.65 billion is the largest economy in the East African region. Kenya is located on the eastern coast of Africa, the country is bordered by Somalia to the east; Ethiopia to the north; South Sudan to the north-west; Uganda to the west and Tanzania to the south. Her geographical position makes her the gateway for trade to land locked EAC countries, Mombasa being the most important port. Nairobi is also becoming the regional hub for air transport, serving major markets like Europe, Middle East and other African countries. It enjoys extensive infrastructure, and is the regional hub for trade and finance in East Africa. The trade pattern shows that Kenya s exports have been on a steady increase since the early 1990 s in response to Government s trade liberalisation measures and structural adjustment reforms. On the one hand, Kenya s exports increased by an average of 12.4% from US $ 3.5 billion in 2006 to US $ 5.2 billion in 2010. On the other hand, Kenya s imports from the world grew from US $ 7.2 billion to US $ 12 billion over the same period, which translates to 17.9% annual import growth. It is evident that Kenya s exports have been growing at a much slower rate compared to imports, a fact which has cause deterioration of the trade balance. To further improve the economy, Kenya has unveiled a new economic blue print, Vision 2030 that is to transform the economy to middle income status by 2030. The key focus of the vision is to enable Kenya to become globally competitive and prosperous nation and to facilitate improvement in economic growth from 7% in 2007 to an average of 10% over the medium term 2008-2012. Trade sector is expected to contribute significantly towards the attainment of the vision 2030 goals, considering its strong emphasis on export-led and private sector driven growth strategy. In particular, the government has set export growth target of 20% to be achieved over a period of five years as elaborated in Private Sector Development Strategy Paper. To achieve this, the country has to consolidate and expand the existing markets and products, and also diversify into new markets and products. The Country derives her trade policies from the bilateral trade agreements and her regional trade membership. Kenya is a member of the World Trade organization, East African Community, Common Market for East and Central African and also has bilateral trade agreement with about 49 countries. 2
2.0 KEY ECONOMIC INDICATORS OF KENYA 2.1 Kenya: Country Profile Some of the indicators have been derived from CIA website Country Name: Capital: Location: Geog. coordinates: Total Area: Natural resources: Population: Republic of Kenya Nairobi Eastern Africa, bordering the Indian Ocean, between Somalia and Tanzania 1 00 N, 38 00 E 582,650 sq. km Limestone, Soda Ash, Salt, Gemstones, Zinc, Fluorspar, Diatomite, Gypsum, Wildlife, Hydropower 38.6 million (2011 est.) Languages: (official) English & Kiswahili, numerous indigenous languages 3
Independence: Economy 12 December 1963 (from UK) GDP (Purchasing Power Parity) (2011 Est.): US $ 70.85 billion GDP - Real Growth Rate (2011 Est.): 4.4% (2011 est.) GDP - Per Capita (PPP) (2011 Est.): US $ 1,700 (2011 est.) GDP - composition by sector (2011 est.): Agriculture: 19%, Industry: 16.4%, Services: 64.6% Agriculture - Products: Tea, Coffee, Corn, Cut flowers, Sugarcane, Fruit, Vegetables; Dairy Products, Beef, Pork, Poultry, Eggs Industries: Small-Scale Consumer Goods (Plastic, Furniture, Batteries, Textiles, Clothing, Soap, Cigarettes, Flour), Agricultural Products, Oil Refining; Aluminium, Steel, Lead; Cement, Commercial Ship Repair, Tourism Exports (2011): US $ 5.8 billion Exports - Commodities: Tea, Horticultural Products, Soda Ash, Coffee, Petroleum Products, Fish, Cement. Exports - Partners (2011): Uganda (14.9%), UK (9.1%), Tanzania (8.2%), Netherlands (6.4%), USA (5.0%), Egypt (4.6%), and Sudan (4.3%) Imports (2011): Imports - Commodities: $14.8 billion Machinery, Transportation Equipment, Petroleum Products, Motor Vehicles, Iron and Steel, Resins and Plastics Imports - Partners (2011): UAE (15.2%), India (11.3 %), China (11.0 %), South Africa (5.4%), Japan (4.5%) and Saudi Arabia (4.1%). Currency (code): Kenyan shilling (KES) Exchange Rate (2011) KES/US $: 88.8 (Central Bank of Kenya) 4
3.0 KENYA S FOREIGN TRADE- AN OVERVIEW 3.1. Balance of Trade Kenya continues to register an unfavourable trade balance as shown in Figure 2 below. The trade deficit went up significantly from US $ 4.9 billion in 2007 to US $ 9.1 billion in 2011. Over 2007-2011 period, imports rose by an annual average of 14.1%, while exports expanded by only 9.7%. The widening trade balance is therefore the result of high growth in high value imports relative to low value (mostly agricultural/ semi processed) exports; a situation which calls for concerted efforts to enhance growth of exports to bridge the trade gap. Figure 1: Kenya s Trade Balance 2007-2011 Source: Economic Surveys, Kenya National Bureau of Statistics (Various issues) 3.2. Kenya s Export Composition Kenya s total exports were valued at US $ 5.8 billion in 2011 accounting for 0.04% of world s total exports. Exports rose from US $ 4.1 billion to US $ 5.8 billion, representing an annual average growth of 9.1% between 2007 and 2011. The export growth was way below the policy target of 20% annual growth in 5 years. The foregoing illustrates minimal participation in foreign trade and measures are needed to accelerate growth in exports so as to increase the share in world trade. 5
Figure 2: Proportion of Kenya s Merchandised Exports in 2011 All Other**, 38.41% Tea, 22.36% Soda Ash, 1.77% Horticulture, 17.59% Cement, 1.81% Essential Oils, 2.35% Animal and Vegetable Oils, 2.41% Tobacco/Tobacco manufactures, 2.58% Apparels/clothing accessories, 3.80% Iron and Steel, 2.96% Coffee, 3.96% Source: Economic Survey, Kenya National Bureau of Statistics (Various issues) Kenya s exports are mainly composed of primary commodities including tea, horticulture, apparels & clothing, coffee, tobacco and tobacco products, iron & steel products, and soda ash which all together account for slightly over 60% of total exports (see Table 1 below). The export base is thus quite narrow, a fact which poses risks to the domestic economy, given the high proportion of agricultural commodities which are subject to international price volatility. Efforts to diversify exportable products therefore need to be pursued, with a view to increasing the share of manufactures, services and other high value added products into the export basket. Table 1: Proportion of Commodity Exports, 2007-2011 (%) PRODUCT 2007 2008 2009 2010 2011 1 Tea 17.03 18.50 19.94 22.36 20.01 2 Horticulture 20.66 20.64 18.91 17.59 16.31 3 Apparels 5.89 5.06 4.04 3.80 4.36 4 Coffee 3.80 2.94 4.44 3.96 3.78 5 Tobacco Products 3.11 2.62 3.02 2.58 3.65 6 Iron and Steel 2.99 3.14 2.63 2.96 3.55 7 Animal & Vegetable Oils 1.26 1.41 1.71 2.41 2.77 8 Essential Oils 1.61 1.86 2.39 2.35 2.70 9 Soda Ash 1.97 3.82 2.41 1.77 2.42 10 Articles of Plastics 1.62 1.78 1.72 1.68 1.83 11 All Other** 40.07 38.24 38.81 38.53 38.63 Total Exports 100.00 100.00 100.00 100.00 100.00 Source: Economic Surveys, Kenya National Bureau of Statistics 6
3.3. Geographical Distribution The top destinations for Kenya s exports are African region and EU, which contributed about 71% of the export earnings in 2011. The Africa market leads with 48.5% market share, of which COMESA (mainly EAC) accounts for 35.2%, followed by European Union at 22.5%. Africa and European market therefore consumes about 71% of Kenya s total exports, which similarly reflect market concentration (See Table 2, and Figure 2). Other important emerging markets with potential include Asia (18.9%) and United States of America (5.0%), which together account for additional 24%. There has not been major change in Kenya s market share in the respective markets over the last five years, with the exception of USA, where market share increased from about 4.6% in 2005 to 8.1% in 2006 before falling to 5% in 2011. Table 2 and Figure 3 below illustrates the extent of Kenya s regional market concentration, a fact which limits the scope of trade gains that can be derived from growth in other world markets. Efforts are therefore needed to identify and develop new growing markets including emerging markets like the Middle East, Eastern Europe, and Latin America among others. Table 2: Value of Merchandise Exports by Region in US $ Millions (2007-2011) US DOLLARS (MILLIONS) REGION 2007 2008 2009 2010 2011 COMESA 1,285.16 1,606.41 1,459.52 1,714.11 2,042.57 EUROPEAN UNION 1,079.35 1,290.76 1,189.59 1,235.92 1,293.56 REST OF AFRICA 557.22 743.13 644.32 669.10 743.54 ASIA 704.98 837.27 777.62 1,039.59 1,085.59 AMERICA 285.47 296.50 225.24 284.26 289.30 REST OF EUROPE 98.26 131.63 115.84 145.16 225.05 ALL OTHER COUNTRIES 69.45 80.53 47.45 84.06 70.80 TOTAL EXPORTS 4,079.89 4,986.22 4,459.59 5,172.21 5,750.40 Source: Economic Survey, Kenya National Bureau of Statistics 7
Figure 3: Proportion of Exports by Region in 2011 Source: Economic Survey, Kenya National Bureau of Statistics 3.4. Kenya s Imports of Merchandise Kenya s main imports in 2011 include industrial machinery, crude petroleum and petroleum products, motor vehicles, iron & steel, and plastics. Most of the imports are capital goods or goods for industrial use, which suggest an expanding economy. Kenya s top import sources are: United Arab Emirates, India, China, South Africa, Japan, Saudi Arabia, Indonesia and United States of America. The top ten import partners account for about 64% of Kenya s import demand, the bulk of which originate from Asian countries. In view of the high growth in imports relative to exports, the narrow export basket, and the limited presence in emerging markets, there is need for concerted efforts among stakeholders in the export sector to promote the expansion, diversification and value addition of Kenya s exports. 8
Table 3: Value of Imports by Country 2007-2011 KSh Million DESCRIPTION 2007 2008 2009 2010 2011* 1 United Arab Emirates 89,466 113,810 89,709 116,045 199,390 2 India. 56,817 90,531 83,243 103,242 148,772 3 China 45,672 63,474 74,524 120,648 144,050 4 South Africa 35,355 46,691 70,561 59,781 71,281 5 Japan 41,129 44,840 48,857 58,244 58,684 6 Saudi Arabia 17,597 25,879 27,522 32,274 53,713 7 Indonesia 18,764 22,928 18,774 26,955 45,350 8 U.S.A 44,523 27,549 50,056 39,316 44,566 9 United Kingdom 29,419 27,976 36,885 37,869 43,208 10 Germany 22,166 26,946 22,729 26,367 31,981 11 All others 204,204 280,027 265,236 326,464 474,677 GRAND TOTAL 605,112 770,651 788,097 947,206 1,315,671 Source: Economic Survey, Kenya National Bureau of Statistics Figure 4: Proportion of Imports by Country in 2011 % Shares of Total Imports DESCRIPTION 2007 2008 2009 2010 2011* 1 United Arab Emirates 14.78 14.77 11.38 12.25 15.16 2 India. 9.39 11.75 10.56 10.90 11.31 3 China 7.55 8.24 9.46 12.74 10.95 4 South Africa 5.84 6.06 8.95 6.31 5.42 5 Japan 6.80 5.82 6.20 6.15 4.46 6 Saudi Arabia 2.91 3.36 3.49 3.41 4.08 7 Indonesia 3.10 2.98 2.38 2.85 3.45 8 U.S.A 7.36 3.57 6.35 4.15 3.39 9 United Kingdom 4.86 3.63 4.68 4.00 3.28 10 Germany 3.66 3.50 2.88 2.78 2.43 11 All others 33.75 36.34 33.66 34.47 36.08 GRAND TOTAL 100.00 100.00 100.00 100.00 100.00 9
4.0 KENYA S BILATERAL TRADE WITH INDONESIA 4.1. Kenya s -Indonesia bilateral trade The bilateral trade between Kenya and Indonesia is heavily in favour of Indonesia, with the trade balance rising from US $ 272.6 million in 2007 to US $ 327.3 million in 2009 and US $ 491.4 million in 2011. Table 4: Kenya s Trade with Indonesia Value in US Dollars (Millions) YEAR 2007 2008 2009 2010 2011 Kenya's Exports to Indonesia 6.24 9.74 7.33 12.48 24.91 Kenya's Imports from Indonesia 278.80 335.70 243.15 339.79 516.26 Trade balance (272.56) (325.96) (235.82) (327.31) (491.36) Source: ITC Trade database 4.2. Kenya s Exports to Indonesia Kenya s exports to Indonesia amounted to US $ 24.9 million and accounted for only 0.4 per cent of Kenya s total exports in 2011. The exports to Indonesia fluctuated over the period between 2007 and 2011 rising from US $ 6.2 million in 2007 to US$ 9.74 million in 2008 before declining to US$ 7.33 million in 2009. As shown below, Kenya s export products to Indonesia in 2011 were few and included soda ash, black tea, tobacco and products, sheep skin leather and dried leguminous vegetables. Table 5: Kenya s Exports to Indonesia Product Product label code Value in US Dollars Millions 2009 2010 2011 TOTAL All products 7.33 12.48 24.91 1 '2836 Carbonate; (Soda Ash) 1.37 2.09 10.22 2 '0902 Tea 3.83 5.86 5.92 3 '2401 Tobacco unmanufactured; tobacco refuse 0.06 1.58 3.57 4 '4105 Sheep/lamb skin leather 1.13 1.56 3.46 5 '0713 Dried vegetables, shelled - 0.48 1.12 6 '7801 Unwrought lead 0.39 0.66 0.21 Coconut, abaca, ramie & other vegetable fibers - - 0.17 7 '5305 8 '4106 Goat/kid skin leather 0.08-0.06 9 '0901 Coffee - 0.03 0.05 10 '5303 Jute & other textile bast fibers 0.37 0.09 0.03 11 '1207 Oil seeds - - 0.03 Source: ITC Trade database 10
4.3. Kenya s Imports from Indonesia Imports from Indonesia amounted to US $ 516.3 million in 2011 and accounted for 3.4 per cent of Kenya s total imports. The imports rose from US$ 278.8 million in 2007 to US $ 339.8 million in 2010. Indonesia is among Kenya s top ten import sources. The main import products from Indonesia comprises among others: crude palm oil, industrial chemicals, refrigerator, yarns, natural rubber and paper and paperboard. Table 6: Kenya s Imports from Indonesia Product Product label code Value in US Dollars Millions 2009 2010 2011 TOTAL All products 243.15 339.79 516.26 1 '1511 Palm oil & its fraction 197.07 244.91 429.97 2 '3823 Industrial fatty acids, acid oils 0.53 7.38 18.56 3 '8418 Refrigerator, freezer 4.50 10.67 9.11 4 '1513 Coconut (copra), palm kernel/babassu oil & their fractions 2.82 7.45 8.67 5 '5509 Yarn of synth staple fibre, not put for retail sale 3.41 6.86 8.08 6 '4001 Natural rubber, 3.48 4.55 5.68 7 '4805 Uncoated paper and paperboard, in rolls or sheets 0.39 0.61 2.79 8 '4810 Paper & paperboard, coated with kaolin or other inorganic substances 2.94 2.67 2.62 9 '7005 Float glass & surf grd/polishd glas in sheet 1.78 2.08 2.50 10 '8521 Video recording or reproducing apparatus 1.68 1.92 2.24 11 '4802 Uncoated paper for writing, printing 1.75 2.18 1.87 12 '8539 Electric filament or discharge lamps 1.70 1.91 1.70 13 '2523 Cements, portland, aluminous, slag, supersulfate & similar hydraulic - 1.26 1.60 14 '2833 Sulphates; alums; peroxosulphates (persulphates) 1.02 1.45 1.50 15 '3920 Other plates, sheets, film, foil, tape, strip of plastics 0.20 1.23 1.30 Source: ITC Trade database 11
4.4. Export Potential Products to Indonesia Table 7: Potential Exports to Indonesia Product Product label code Kenya's exports to Indonesia Indonesia's imports from world Kenya's exports to world Value in US Dollars Value in US Dollars Millions Value in US Dollars Millions 2009 2010 2011 2008 2009 2010 2009 2010 2011 TOTAL All products 7.33 12.48 24.91 129,244.05 96,829.16 135,663.28 4,463.44 5,169.11 5,853.31 '7209 Flat-rolld prod of iron/non-alloy steel - - - 726.84 454.25 782.00 4.24 11.87 33.44 '0402 Milk and cream, concentrated or sweetened - - - 640.47 395.53 627.24 5.44 6.76 5.71 '2401 Tobacco unmanufactured; tobacco refuse 0.06 1.58 3.57 330.51 290.17 378.71 50.12 30.20 54.49 '3004 Medicament mixtures, put in dosage - - - 215.92 251.38 316.30 54.94 59.76 70.65 '4104 Leather of bovine/equine animal, - - - 269.07 160.97 275.26 4.26 16.62 33.41 '2836 Carbonate; (Soda Ash) 1.37 2.09 10.22 306.40 201.66 226.04 109.45 95.46 145.17 '3808 Insecticides, fungicides, herbicides packaged for retail sale 0.03 - - 160.30 167.59 221.56 18.60 22.46 24.44 '2501 Salt - - - 71.45 91.07 109.25 30.90 28.57 31.05 '7214 Bars & rods of iron/non-alloys - - - 151.81 72.49 102.99 10.04 14.22 18.32 '7404 Copper waste and scrap - - - 56.30 29.00 90.69 6.98 3.07 8.68 '2403 Pipe, chewing & snuff tobaccos - - - 66.57 71.72 85.58 0.25 12.91 57.64 '6402 Footwear, outer soles and uppers of rubber or plastics - - - 33.53 36.21 64.06 17.52 15.74 19.04 '0713 Dried vegetables, shelled - 0.48 1.12 22.58 39.62 53.83 2.98 34.83 16.99 '0901 Coffee - 0.03 0.05 18.44 25.01 34.85 201.24 207.47 223.51 '4901 Printed books, brochures,leaflets - - - 44.62 37.34 26.87 13.83 8.97 14.88 '1704 Sugar confectionery, not containing cocoa - - - 19.64 15.30 25.79 42.20 53.58 59.54 '4105 Sheep/lamb skin leather 1.13 1.56 3.46 8.86 13.98 23.16 6.74 11.22 16.34 '2009 Fruit & vegetable juices, unfermented - - - 15.12 16.99 20.10 24.54 27.00 27.88 '0804 Pineapples, mangoes, avocadoes - - - 14.64 16.90 19.08 28.85 31.93 36.76 '0902 Tea 3.83 5.86 5.92 11.99 12.54 18.55 893.98 1,163.63 1,176.31 '1517 Margarine - - - 11.76 14.54 18.54 33.61 28.60 33.75 '1107 Malt, whether or not roasted - - - 17.88 15.24 16.65 4.59 2.34 6.35 '2008 Preserved fruits - - - 11.15 10.72 16.55 42.39 57.24 54.08 '3401 Soap; organic surface-active preparations for soap use - - - 14.11 12.68 13.28 49.62 62.75 95.68 '4106 Goat/kid skin leather 0.08-0.06 10.08 6.62 12.01 17.80 24.93 32.08 '0401 Milk and cream, not concentrated nor sweetened - - - 24.60 16.08 11.85 6.45 7.52 6.73 '2005 Prepared or preserved vegetables - - - 8.80 10.79 9.87 20.17 33.48 36.08 '0710 Frozen vegetables - - - 8.34 8.91 9.64 4.03 6.29 8.60 '0304 Fish fillets and pieces, fresh, chilled or frozen - - - 4.65 5.15 8.28 42.15 47.18 39.27 '1604 Prepared/preserved fish & caviar - - - 10.73 5.42 7.59 9.53 11.47 11.71 '6405 Footwear - - - 17.15 7.21 6.52 4.03 7.46 8.23 '2402 Cigars, cheroots, cigarillos & cigarettes - - - 4.36 3.87 6.25 85.79 92.71 103.75 '0204 Meat of sheep or goats - fresh, chilled or frozen - - - 2.89 3.80 5.56 0.85 4.34 8.75 '0802 Nuts - - - 3.06 3.54 5.44 12.60 22.53 22.50 '2208 Spirits, liqueurs, other alcoholic beverages - - - 2.23 0.26 5.17 10.79 15.17 12.95 Source: ITC Trade database 12
The value of exports to Indonesia reveals that Kenya is a marginal supplier to the market but the country has a significant presence in the market for some products including tea and soda ash. The country must consider expansion of these products into this market and also diversify product range through promotion of other products where Kenya has a supply capability but their presence in Indonesian market is minimal. From the table above, the potential products include tobacco and products, milk and cream, leather (of sheep, lamb, and goat), salt, iron and steel products, insecticides, footwear, margarine, horticulture (fruits-pineapples, mangoes, and avocado; nuts, vegetables, and flowers), coffee, beverages(juices and alcoholic), meat, tobacco products, and fish among others. 5.0 CONCLUSION AND RECOMMENDATIONS The analysis has revealed that Kenya exports a limited number of products to Indonesia while a substantial number of products from Indonesia. The exports are sodium carbonate (soda ash), black tea, and tobacco and products which are of low value and also have marginal shares in the Indonesian market and not comparable to the market potential. The import products from Indonesia are substantial and make the trade balance heavily in favour of Indonesia. The imports comprises among others: crude palm oil, industrial chemicals, refrigerator, yarns, natural rubber and paper and paperboard. To bridge the trade gap between Kenya and Indonesia, there is need for Kenya to expand products currently exported into this market and also diversify product range through promotion of other products where Kenya has a supply capability but their presence in the Indonesian market is minimal. The potential products include tobacco and products, milk and cream, leather (of sheep, lamb, and goat), salt, iron and steel products, insecticides, footwear, margarine, horticulture (fruits-pineapples, mangoes, and avocado; nuts, vegetables, and flowers), coffee, beverages(juices and alcoholic), meat, tobacco products, and fish among others. Kenya also needs to carry out market studies. Consumer and quality preferences and other norms in the Indonesian market need to be investigated and information disseminated to exporters with a view to undertaking appropriate adaptation and development of the products for Indonesian market. In addition, Kenya will need to organize trade fairs & exhibitions in Indonesia to facilitate entry of new products into Indonesian market. The Government of the Republic of Indonesia to consider favourable trade terms for Kenya s products. 13