KONTAN.CO.ID - ​BOGOR, Indonesia. The leaders of Indonesia and Iran on Tuesday signed a preferential trade agreement to expand economic relations during an official visit by Iranian President Ebrahim Raisi.

Indonesian President Joko Widodo, speaking after a signing ceremony that was streamed online by his cabinet secretariat, hoped the agreement "would increase trade between Indonesia and Iran" but did not provide details.

Raisi's visit comes as ties between Iran and the West become increasingly strained following Iranian security forces' violent crackdown on protests against the country's clerical elite after the death of a Kurdish woman in morality police custody last year.

Several countries including the United States have imposed broad sanctions on Iran over its nuclear programme and alleged rights violations.

Trade between Indonesia and Iran dropped from $715.5 million to $141.6 million in 2019 after the United States imposed sanctions on Iran.

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Raisi said on Tuesday via a translator that "sanctions and threats will not stop us".

"Partnerships and relationships with neighbouring countries and Islamic countries and countries with the same views are our priority," he added.

Indonesian trade ministry official Djatmiko Bris Witjaksono said on Tuesday the two countries had agreed on a "countertrade" scheme in which goods and services can be exchanged "without being constrained by scarcity or currency difficulties".

Two-way trade between the nations currently amounts to around $250 million, with the Southeast Asian country recording about a $200 million surplus, according to the Indonesian trade ministry.

Djatmiko told reporters on Monday Indonesia is keen to boost trade with the Middle East and the surrounding region.

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"Iran could be a gateway to the surrounding region, such as Central Asia ... or even to Turkey because we do not have any trade deal with Turkey yet," he said.

Under Tuesday's agreement, Iran would give Indonesia greater access to products like processed food and pharmaceuticals, textile, palm oil, coffee and tea, while Indonesia will lower tariffs for Iran's oil and chemical products, metals and some dairy products.

Editor: Yudho Winarto