China signs $597m deal, plans factory relocation

Mustaqim Adamrah and Desy Nurhayati ,  The Jakarta Post ,  Jakarta   |  Fri, 09/05/2008 11:31 AM  |  Headlines

Thursday proved a busy day of signing for businesses from Indonesia and the Chinese province of Guangdong, with 30 contracts worth a total of US$597 million being finalized.

"We look forward to win-win cooperation with Guangdong," Trade Minister Mari Elka Pangestu said in a forum attended by delegates from Guangdong businesses.

"Guangdong businesses first came here in 2000 and it was a success story. We hope our cooperation with Guangdong this time will have the same story," she said.

According to data from the Guangdong Department of Foreign Trade and Economic Cooperation, the trade volume between Indonesia and the province reached $5.19 billion in 2007 -- 32.8 percent higher than in the previous year.

The total trade volume between Indonesia and China as of July was $19 billion. It is projected to reach $30 billion by 2010.

Coal, paper and paperboard, edible vegetable oil, integrated circuits and consumer electronics from Indonesia are top-selling products in Guangdong, the department said in a statement.

Textiles, garments, furniture, shoes, ceramic products, telephones, motorcycles and other mechanical and electrical products from Guangdong are popular among Indonesian consumers, it said.

Indonesia and other ASEAN members are hoping to sign a free trade agreement (FTA) with China to stimulate business ties with the economic giant, Mari said.

"ASEAN has signed FTAs with Australia, New Zealand and India, which will be implemented by next year," she said.

"We hope to sign an FTA with China by 2010."

President Susilo Bambang Yudhoyono had earlier held a meeting with the Chinese delegates at the presidential office, during which they discussed a plan to relocate some businesses from Guangdong to Indonesia.

Clothing and electronics businesses from Guangdong are planning to make Indonesia their regional production base because of increasing domestic labor costs in China, Mari said after the meeting.

She said Central Java and East Java had been prepared as relocation sites, with administrations in the two provinces, particularly in Semarang and Surakarta, ready to welcome the investors.

The much-debated Tangguh LNG deal was also discussed during the meeting, with President Yudhoyono reaffirming that Indonesia wanted to continue the project pending renegotiation.

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