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Indonesia, China relations almost in honeymoon state: Sudrajat
SUDRAJAT: (courtesy of Embassy of Indonesia to China) Indonesian Ambassador to China Sudrajat was in Jakarta recently, attending a meeting of Indonesian ambassadors
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SUDRAJAT: (courtesy of Embassy of Indonesia to China)
Indonesian Ambassador to China Sudrajat was in Jakarta recently, attending a meeting of Indonesian ambassadors. On the sidelines of this meeting, Ambassador Sudrajat sat down with The Jakarta Post's Tony Hotland to discuss various matters pertaining to bilateral relations between Indonesia and China. The following are excerpts of that interview:
Question: What is the present state of relations between Indonesia and China, especially since both countries agreed to a strategic partnership in 2005?
Answer: There have been significant engagements in political, security, economic, and socio-cultural affairs. In politics, both countries have signed cooperation (agreements) in various fields, such as the exchange of officers and information, and there are even plans for China to provide Indonesia with military equipment.
With the signing of an agreement between the two defense ministers, there are detailed action plans to follow. We are also looking forward to the signing of an extradition treaty this year.
In economics, we've made huge progress in terms of trade volume. Since 2004, we've seen an average 23 percent increase each year. The target for 2008 of US$20 billion was already met last year when the trade volume stood at $24.9 billion. Both governments are now eyeing a $30 billion target for 2010, but I'm optimistic that we'll reach that figure by 2009.
We had a surplus in 2005 and 2006, but last year it was in China's favor by some $200 million. But that's nothing to worry about because we were buying a lot of capital goods ... for investment. So that's a pleasing trend.
It was also because we were unable to fully meet a lot of Chinese demands for chemical products, machinery, palm oil or coal. So the market is there, but it's up to us. China is basically asking for everything we can sell, although it is mainly looking to buy for raw materials.
Our exports to China consist not only of raw materials, but also half-made products, but one of the biggest steps we have achieved is in our exports of machinery. This makes up to 20 percent of our exports to China, meaning there's encouragement for non oil and gas exports.
Chinese investments here are, however, trivial. They import a lot of raw materials and re-sell the final products to us. Any efforts to induce greater investments?
The biggest investment was the construction of 10,000-megawatt coal-fired power plants. China got a concession of 4,700 megawatts.
In terms of managing our natural resources, our government no longer encourages sales of iron ore, coal in rolls or crude palm oil, but rather requires investors to invest in Indonesia to turn the raw materials into at least half-made products. We've invited them to construct smelters for steel, nickel and others.
We expect not to sell just coal any more but refined into its derivative form of cooking coal. There's technology to extract oil from coal and it can also be used for fertilizer and chemicals ... what we call coal-chemical products.
And how has China responded to this?
Pretty well. But we must note that China is fairly new to investing overseas, so there's a lack of infrastructure in place such as regulations, treaties or other conditions that big investors like the U.S., Japan or the UK are already offering very well. China doesn't have a lot of these, so negotiations can be quite difficult.
On our side, we're working to revamp our business climate. Local autonomy is one of the challenges for investors, so it is homework for Indonesia.
Are we attractive enough to China in the region?
Most Chinese investments in Indonesia are in the oil and gas sector. There's not much in the industrial sector. China isn't as established an investor as Japan or even South Korea in foreign investment. We have a lot to learn about each other because there's still some reluctance on both sides.
But the Chinese government has intended to diversify its investments and has even allocated funds. The funds are pretty big, around $200 billion since 2007, and they're still studying how and where to invest. Hopefully Indonesia gets some of those.
I can say that China and Indonesia are almost in a 'honeymoon' state.
What other aspects of the relationship show potential for both countries?
I notice we're low on exchange of students and intellectuals. Most probably this is because of the language barrier. There's no infrastructure to facilitate exchanges on academic issues.
China is extremely rich in knowledge and technology, (for example in traditional medicines or home industry businesses). There are many fields to upgrade.
In tourism, with the granting of visas on arrival for Chinese last year, we are hosting more Chinese tourists. Our data shows there were 250,000 visitors, and our target for this year is 400,000.
However, there are more Indonesians going to China to study and do business.
