UPDATE 2-Indonesia and United Arab Emirates reach trade pact

(Writes through, adds details, quotes; changes dateline, previous JAKARTA)

By Alexander Cornwell

ABU DHABI, July 1 (Reuters) - Indonesia and the United Arab Emirates on Friday signed a free trade agreement, strengthening economic ties between Southeast Asia's largest economy and the major oil producing Gulf state.

The accord, reached during a visit by Indonesian President Joko Widodo to Abu Dhabi, will remove or sharply reduce duties on most goods traded between the Muslim countries.

The UAE economy ministry said Indonesian palm oil, food products, fashion wear and Emirati petrochemicals, rubber products, plastics and steel would benefit from reduced or eliminated tariffs.

The accord includes chapters on services, investments, intellectual property rights and mutual recognition of each others' halal certification, Indonesia's trade ministry said.

The text of the agreement was not released and still needs to be ratified by both countries, which is largely procedural in autocratic UAE but could take months in democratic Indonesia.

Indonesia's main exports to the UAE are palm oil, jewelry and precious metals, while Emirati exports to Indonesia are mostly petroleum gases and non-crude oils, iron and non-alloy steel, according to the Observatory of Economic Complexity.

Oil rich UAE has forged closer trade ties with Indonesia as part of an ambition to double its own economy to $816 billion by the end of the decade, in part by signing free trade agreements.

It has signed similar deals with India and Israel this year.

Emirati Economy Minister Abdullah bin Touq told reporters the deal with Indonesia could increase bilateral non-oil trade to $10 billion within five years, up from around $3 billion last year.

Indonesian Trade Minister Zulkifli Hasan said that Jakarta expects more UAE investment in Indonesia following the pact, which he said would boost exports to the Middle East and elsewhere.

The UAE, a country of about 10 million people, is a major trade hub for the Middle East and parts of Africa, Asia and Europe.

The UAE will benefit from greater access to the Indonesian market of over 270 million people at time when it is diversifying its trade links and seeking to create jobs for its 1 million citizens.

Emirati Minister of State for Foreign Trade Thani Al Zeyoudi told Reuters the government estimated the trade pact would create 55,000 highly skilled jobs in the UAE by 2030.

“It's going to add about $4.6 billion to our GDP by 2030. It's going to increase the exports by $3.2 billion and increase the imports by $2.6 billion by 2030," he said in an interview.

The UAE is in bilateral free trade talks with at least a dozen other countries, including Australia and South Korea.

"We're almost done with Colombia. It is going to be signed in the coming few weeks," Al Zeyoudi said, adding that an accord in Turkey could be reached before the end of the year. (Reporting by Alexander Cornwell in Abu Dhabi and Bernadette Christina in Jakarta, writing by Alexander Cornwell; Editing by Toby Chopra and Jonathan Oatis)