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Jakarta Post

Rows with Oz, Brazil have different impact

Diplomatic rows with Australia and Brazil over the death penalty for drug convicts from the two nations will have different impacts on the state of their economic relations with Indonesia

Linda Yulisman (The Jakarta Post)
Jakarta
Wed, February 25, 2015

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Rows with Oz, Brazil have different impact

D

iplomatic rows with Australia and Brazil over the death penalty for drug convicts from the two nations will have different impacts on the state of their economic relations with Indonesia.

The Indonesian government has been the target of strong protests from Australia and Brazil, citizens of which are among the 11 people facing the firing squad for drug trafficking.

Heightening tensions, Brazil recently delayed its acceptance of the credentials of Indonesian smbassador designate to Brazil Toto Riyanto.

Vice president Jusuf Kalla said Tuesday that despite the row, Indonesia would still continue business ties with Australia, one of its major trading partners, particularly as a supplier of cattle and beef.

'€œIf we don'€™t import cattle, it will affect Australia. On the other hand, it will also be difficult for us if we cannot get meat. Therefore, our trade must go on as usual,'€ he told reporters during his visit to the Investment Coordinating Board (BKPM).

In contrast to this attitude, Kalla further said that the government was considering the cancellation of the purchase of fighter jets and rocket launchers from Brazil.

This move, he said, was a response to Brazil'€™s action, which he did not elaborate on, but which likely refers to Brazil'€™s decision to play down Indonesia'€™s threat.

In a statement quoted by foreign media reports, Brazilian President Dilma Rousseff said its bilateral trade with Indonesia was insignifant as it was only US$4 billion, or less than 1 percent of its total external trade amounting to $454 billion last year.

'€œWe'€™re first checking our commitments and purchase contracts and we'€™ll see [about further measures],'€ Kalla said, adding that some countries, such as the US, South Korea and Japan, could serve as alternative suppliers.

Indonesia has undergone repeated rows with Australia, one of its closest neighbors. One of the most serious ones occurred in 2013 when the latter'€™s intelligence allegedly spied on then president Susilo Bambang Yudhoyono and the First Lady, leading to suspension of some bilateral cooperations, including security.

In contrast, it has a relatively peaceful relationship with Brazil, South America'€™s largest economy and one of its main non-traditional export destinations, despite some trade disputes brought to the World Trade Organization (WTO).

Bilateral trade between Indonesia and Australia topped $10.68 billion from January to November last year, with Indonesia selling $5.03 billion in commodities and goods and buying $5.65 billion, according to the Trade Ministry'€™s statistics. Annual exports are crude petroleum oil, gold, paper, wooden furniture and cocoa, while imports are dairy products, wheat, cane sugar, aluminium oxide and cotton.

Indonesia'€™s bilateral trade with Brazil totaled $3.74 billion last year, with exports and imports amounting to $1.37 billion and $2.38 billion respectively. Key exports are rubber, palm oil, paper, electronics and automotive parts, while imports cover soybean oil, sugar cane, cotton, iron and aircraft.

The vice president'€™s economic team chief Sofjan Wanandi said the tension between both governments would not last long as the outcry against Indonesia'€™s death penalty was a natural reaction.

'€œTheir anger is a normal thing because they must secure their own domestic interests. We must accept that as a reality, but I think it will not stand for a long time,'€ he said.

In terms of trade and investment, business players would follow the direction of business opportunities and would not be largely influenced by political issues, Sofjan added.

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