Opinion

Deepening China and Indonesia
partnership

On Oct. 2-3 Chinese President Xi Jinping will visit Indonesia, the first stop on his maiden Southeast Asia tour that will also take him to Malaysia and the APEC Summit in Bali.

 The momentum of the visit is timely, as the world is still experiencing the global economic crisis and political uncertainty in some regions. With the Asia-Pacific becoming the engine of the world economy in recent years, Xi’s visit will enhance ties between China and its Southeast Asian neighbors.

Xi, who became the new president of the People’s of the Republic of China in March 2013, has known Indonesia well since the beginning of his political career. He had strong connections with Indonesia during his tenure from 1985-2002 as regional party leader and governor of Fujian, a province from where Indonesia’s Chinese tycoons mostly hail.

A series of high-level exchanges have set the stage for Xi’s visit. In May, Chinese Foreign Minister Wang Yi visited Jakarta, while Indonesian Foreign Minister Marty Natalegawa was in Beijing in August. Other Indonesian high-ranking officials also visited Beijing, such as Maritime Affairs and Fisheries Minister Sjarif Cicip Soetardjo in May, Youth and Sports Minister Roy Suryo in August and Tourism and Creative Economy Minister Mari Elka Pangestu in September. China’s state councilor Yang Jiechi visited Jakarta in the middle of September.

While highlighting bilateral cooperation and exchange in three pillars — political, economic and social-cultural — the visit of President Xi is mostly aimed at reaffirming the special significance of ties between Indonesia and China in all sectors as stated in the Declaration of Strategic Partnership signed in 2005 by President Susilo Bambang Yudhoyono and former Chinese president Hu Jintao.

Several agreements are slated to be signed during Xi’s trip to Jakarta, among them memorandum of understanding (MOU) in the sectors of fisheries, tourism, industry, education and youth. In terms of business to business contact, the state visit will coincide with the inking of several business deals totaling US$20 billion, including an agreement between several Chinese companies and the Jakarta Monorail to build a factory to assemble and maintain trains for an initial 30-kilometer-long network.

Looking at what China and Indonesia have achieved in their strategic partnership, we can say bilateral cooperation between them represents one of the most vibrant and comprehensive bilateral relationships in the Asia-Pacific region.

In terms of politics, Indonesia and China have maintained political dialogue on bilateral, regional and global issues as well as mutual support in a variety of candidacies in international bodies.  Both countries share a vision of how to find peaceful settlements to strategic issues in the region, such as the South China Sea.

In terms of trade, China is Indonesia’s second largest trade partner, while Indonesia ranks fourth among China’s ASEAN trade partners. According to Chinese customs data, bilateral trade volume between Indonesia and China has grown significantly since the signing of the Joint Declaration in 2005, from only $16.5 billion in 2005 to $66.2 billion in 2012. This amount is approaching the trade target of $80 billion by 2015.

Regarding investment, trends show encouraging growth. China’s investment in Indonesia totaled $2.02 billion in 2012, up from around $1.2 billion in 2011, while Indonesia’s investment in China amounts to around $3.8 billion. With so many opportunities on offer in the Masterplan for the Acceleration and Expansion of Indonesia’s Economic Development (MP3EI) 2011-2025, Chinese investment is expected to increase in the coming years.

In the socio-cultural field, visits by Indonesian and Chinese businessmen, scholars and students — one of the driving forces behind the bilateral relationship and cooperation, are expanding rapidly. Today, around 15,000 Indonesians are studying in China, making Indonesia the fifth biggest source country for international students in China’s higher education institutions.

Conversely, China is a top source of foreign tourists for Indonesia. Last year, around 800,000 tourists from China visited Indonesia. With serious promotion in China, it seems that 1 million arrivals from China will be reached by 2013.

In the midst of success in achieving strong bilateral relations between the two countries, there is a “trust deficit” problem that needs to be addressed to deepen the strategic partnership further and make it more comprehensive, particularly in the business sector.

The issue of funding is critical to successful economic and trade relations between the two countries. Therefore, the proposal to set up an escrow account for commercial transactions is deemed necessary to anticipate problems and trade disputes.

 Lastly, the strategic partnership cannot be separated from broader ASEAN-China relations. In terms of economics and trade, for instance, implementing the cooperation cannot be disconnected from the ASEAN-China Free Trade Agreement (AFCTA). Then the upgrade of ACFTA could include measures to enhance connectivity between ASEAN member countries and China by establishing the new silk road, for example.  

This new silk road could bring unprecedented opportunities for regional development. And with the status of China as the second largest economy in the world and its economy continuing to grow, China could play a greater role in the development of Southeast Asia.

The writer is a diplomat in the Indonesian Embassy in Beijing. The views expressed are personal.

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