Indonesia and Iraq agreed to eliminate trade barriers and provide incentives to increase bilateral trade volumes, which suffered a sharp decline last year, the Jakarta Post quoted Indonesia's trade minister as saying on Monday.

During a meeting in the capital city of Jakarta, the two countries' senior trade officials agreed to establish a task force in the next three months to identify barriers in bilateral trade and investment.

Indonesian Trade Minister Mari Elka Pangestu said the task force would explore actions and possible incentives to promote the two countries' trade volume.

Iraq had, for example, offered Indonesian businessmen wider investment opportunities in various sectors energy and oil and gas, telecommunications, petrochemicals, pharmaceuticals, banking and housing construction projects as part of a program to promote trade relations.

"Indonesia and Iraq have a lot of business potential that hasn' t been optimally explored," Mari said at a press conference Saturday, after the sixth session of the Indonesia-Iraq joint commission meeting on economic, scientific and technical cooperation.

The meeting was also attended by acting Iraqi Trade Minister Safaaldeen Mohammed Abdulhakeem Al-Safi.

According to the Indonesian Trade Ministry, bilateral trade between Indonesia and Iraq dropped sharply to 41.26 million U.S. dollars in 2009 from 265.59 million dollars in 2008.