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Jakarta Post

No big deals from king ’s visit

  • Haeril Halim and Anton Hermansyah

    The Jakarta Post

Jakarta   /   Thu, March 2, 2017   /  07:19 am
No big deals from king ’s visit Saudi King Salman, center, walks under the umbrellas during a heavy rain upon arrival at the presidential palace in Bogor, West Java, Indonesia, Wednesday, March 1, 2017. Salman arrived in the world's largest Muslim nation on Wednesday as a part of a multi-nation tour aimed at boosting economic ties with Asia. (AP/POOL/Achmad Ibrahim)

Despite high hopes that the historic royal state visit of King Salman bin Abdulaziz Al Saud to Indonesia would bring in at least US$25 billion in investments, it was revealed on Wednesday that this country would receive much less, as the only investment deal the oil-rich kingdom agreed to sign was for a total of $1 billion.

President Joko “Jokowi” Widodo and King Salman witnessed on Wednesday the signing of 11 agreements in the form of memorandums of understanding (MoU), with only one agreement signed by the Saudi Fund Contribution and the Finance Ministry bearing details of the kingdom agreeing to spend $1 billion to finance various development projects in Indonesia.

Foreign Minister Retno LP Marsudi said the $1 billion fund could be allocated for the government’s projects, including those involving infrastructure and sanitation.

The other 10 agreements were aimed at improving the relations between the two countries in Islamic affairs, information and education, health, maritime affairs and the fishery, international affairs, aeronautics, science, small and medium enterprises and transnational crimes.

(Read also:Indonesia, Saudi Arabia aim to strengthen bilateral ties)

Cabinet Secretary Pramono Anung claimed last week that President Jokowi and King Salman would sign a $25 billion deal in the energy sector on the first day of the visit by the octogenarian monarch.

The new deal signed on Wednesday, however, won’t likely tip the balance in favor of Indonesia, which contributes to Saudi Arabia’s national income as it has become the sender of the most number of haj pilgrims — approximately 211,000 per year — to the kingdom.

Saudi Arabia has also benefitted from thousands of Indonesians traveling to some of the holy sites in the kingdom for umrah (minor pilgrimage).

Other than business concerning the haj and umrah, trade and economic relations between the two countries are still weak, having dropped by up to 36 percent in 2014 and 2015.

In 2016, direct foreign investment from Saudi Arabia only amounted to about $900,000, down from $30 million in 2015, according to data from the Investment Coordinating Board (BKPM).

What the Saudis plan to invest in Indonesia was significantly less than the $7 billion the Aramco oil company invested to buy shares in a petrochemical refining project owned by Malaysia’s Petronas.

Neither was there any deal signed concerning investment in the tourism sector during the Wednesday meeting, despite the expectations of the Indonesian government.

King Salman and the 1,500 members of his entourage are expected to fly to Bali for a holiday, a trip that the Indonesian government expects could draw more tourists from the Middle East in the future.

During the meeting, President Jokowi also made a request to the kingdom to remove trade barriers so that it could export its halal products, fishery products, medicines, textiles and garments to Saudi Arabia.

The President also hailed the signing of an agreement between state-owned energy company Pertamina and Aramco for a refinery upgrading project in Cilacap, Central Java, worth $6 billion.

The $6 billion deal between Aramco and Pertamina was secured in December 2016.

“We want to push for basic engineering designs [for the project], as well as the establishment of a joint venture [between the two companies] to be realized soon,” Retno said in a press conference held after the meeting.

During the talk, Jokowi also offered a number of projects for Saudi Arabia to finance, including plans to build oil refineries in Dumai, Riau, Balongan in West Java and Bontang in East Kalimantan.

Saudi Arabia has made no commitments on the offers. Officials from Indonesia and Saudi Arabia plan to meet again in the future to discuss the details of the projects.

Indonesia also offered to Saudi Arabia the chance to finance the development of a mine-mouth coal-fired power plant in Jambi, as well as other infrastructure projects for drinking water, sanitation and housing.

Speaking after Rento, Saudi Arabia’s Minister of State for Foreign Affairs, Nizar Bin Obaid Madani, said that King Salman had appreciated the progress of development in Indonesia and the kingdom was looking forward to stepping up efforts to improve cooperation in the economic sector.

“The two leaders agreed to increase investment in infrastructure, such as in housing and others,” Nizar said.

Later in the evening, President Jokowi uploaded a video onto his YouTube channel to provide the public a glimpse of the meeting.

With traditional Sundanese music playing in the background, Jokowi introduced King Salman, who was finishing his meal, to viewers.

King Salman, through an interpreter, thanked Jokowi for the warm welcome and delivered a message to the Indonesian people: “For us, the Indonesian people are our brothers and sisters. Very noble people,” the monarch said.

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