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n recent years, Indonesia and Taiwan have become much more engaged economically than ever before. Indonesia will soon be recipient to even more investment from major Taiwan firms in the hi-tech industry, including Foxconn Technology Group and Quanta Computer Incorporated. The Jakarta Post’s Linda Yulisman talks to Andrew Hsia, representative of the Taipei Economic and Trade Office in Jakarta, about the countries’ economic ties.

Question: How do you see relations between Indonesia and Taiwan right now and what do you expect in the next five years?

Answer: The relationship is very good in substantial terms. For example, we now have 186,000 Indonesian migrant workers in Taiwan, an increase of 46,000 from two years ago.

In terms of investment, you read so much about possibility of Foxconn and others setting up factories here, and these companies are definitely on the way. Potential investors are visiting Indonesia.

What we will have in five years time really depends on how we want the relationship to pan out. If we set a ceiling, we cannot go any higher. But, if we think the sky is the limit, then anything is possible because in terms of economy, Indonesia and Taiwan are so complementary to each other. You have the material and human resources and the market. On the other hand, Taiwan has the technology, the know-how, managerial skill and the channels to market products to Europe, United States and Japan, so if you put these two together, it’s a perfect combination.

You said that the relationship will depend on how we want it to be. What should Indonesia do to improve the relationship?

First, Indonesia should promote itself. The biggest problem is a lack of understanding and misconception. Few people in Taiwan realize what Indonesia is. They remember only the negatives, like volcanoes, the tsunami, earthquakes, riots and bombings. These are the images of Indonesia in the mind of many people.

But when you visit Indonesia, it is totally different. This is a democratic country and a free society.

Indonesia is rich in natural resources and human resources. The population is young and the economy is booming. You have a much larger middle class than we thought, larger even, than our own population. You need to promote this side of the country, to make people understand and attract them here.

You also need to think outside the box with regard to Taiwan. Every time people talk about Taiwan, they feel we are sensitive and troublesome. That is not the case now. Taiwan is practicing a much more pragmatic policy with much more viable approaches.

We are dealing with China these days. Since the inauguration of our president in 2008, we have signed 18 agreements with China, including a free trade agreement. So, if we can do it with China and China can do it with Taiwan, why not Indonesia? Why set the ceiling, why set limitations? Why not negotiate on free trade and forge closer economic cooperation? Why not invite more Taiwanese to invest here in Indonesia?

You need to think outside the box on your “one China policy”. We’re not saying you need to change the policy, but there is plenty of room for you to improve our relations. Relations are already very good, but there is always room to improve.

Tell us a bit more about Taiwanese companies prepared to invest in Indonesia.

Indonesia is unique. International rating agencies make it a country worthy of investment. It is becoming much more attractive in terms of the investment environment.

Indonesia provides a very stable environment with abundant labor, and also the economy is doing very well. You have a huge domestic market. We’ve already seen an influx of Taiwanese investment to Indonesia. It is not us who push for more investment — it is the market that pulls people to Indonesia.

On the other hand, China, for example, is becoming less attractive than Indonesia because the costs of labor and land, combined with shortages of labor, so many investors are re-evaluating their strategy and thinking about Indonesia.

I think the time is now, and the advantage of Taiwan is that we are bringing the technology. Take Foxconn, for example. When they come, they’re actually upgrading the entire industry of Indonesia from totally labor-intensive to technology-centered. That will be very good for Indonesia in creating jobs, technology and wealth.

Could you give an estimation of the value of the planned investment?

It will be difficult. You have to understand the nature of Taiwanese industry. We are mostly small and medium enterprises, but we are bringing technology, and not just exploiting natural resources.

You also need to know that even according to the Investment Coordinating Board (BKPM) Taiwan is the ninth-largest investor in Indonesia. Many investments from Taiwan actually come from other directions. For example, they come from Singapore, Mauritius, Virgin Islands or China. They may have their own financial considerations, tax reasons and so forth. When we say we’re No. 9, in reality we could be No. 4 or 5.

Indonesian Institute of Sciences (LIPI) and Taiwan’s Chung-Hua Institution for Economic Research are conducting a joint feasibility study on the economic cooperation agreement between the two countries. How is the progress?

They have done their preliminary research on the benefits of closer economic cooperation. I think the conclusion of the phase one shows that it is beneficial to both countries and they are now into the second phase of the study. The result should be out this December.

We hope that this study will provide a basis for the government to consider a discussion with Taiwan about closer economic cooperation because so far, compared with Korea and China, we are at a disadvantage because of the lack of a free trade agreement. Chinese products, for example, are free of tariffs, but for our products we have to pay duty of 5 percent to 7 percent duty on average.

We will conclude free trade agreements with Singapore and New Zealand soon. But with Indonesia, we need to think how to improve relations.

Don’t set a ceiling. Don’t be limited by “non-diplomatic recognition”. It doesn’t matter. We’re living the real world. You have to deal with Taiwan directly, no matter whether you have diplomatic ties or not.