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Jakarta Post

Indonesia plays it cool in competition for China’s OBOR money

  • Fedina S. Sundaryani

    The Jakarta Post

Jakarta   /   Fri, May 12, 2017   /   08:30 am
Indonesia plays it cool in competition for China’s OBOR money Economic talk: Investment Coordinating Board (BKPM) chairman Thomas Trikasih Lembong discusses Indonesia's investments during a visit at The Jakarta Post on Feb. 20. (JP/Donny Fernando)

Indonesia is playing its cards close to its chest in its effort to convince China to sink more money into the archipelago through the ambitious One Belt One Road (OBOR) initiative, by offering limited projects in only two to three regions deemed most suitable for the new Silk Road.

In the OBOR summit, slated for next Sunday through Monday, China will gather 29 countries to upgrade the legendary Silk Road trade route into an advanced global trade network, by investing heavily in infrastructure connecting Asia, Africa and Europe.

Investment Coordinating Board (BKPM) chairman Thomas Lembong confirmed that Indonesia would only offer infrastructure projects in a limited number of regions as the government had found that a lack of focus could make Chinese investors hesitant.

While declining to mention the exact regions as the matter still needs to be discussed in a meeting at the office of the Coordinating Maritime Affiars Minister on Friday, he noted that Indonesia would focus on maritime projects encompassing transportation, telecommunications, tourism, industrial estates, energy and power.

“We have a vision that during the summit, we will propose integrated projects worth tens of billions of US dollars. However, the government must first pick out two or three priority regions,” he said on Wednesday.

Since its establishment in 2013, the OBOR initiative has seen more than US$50 billion of Chinese investment. It could funnel investments, worth between $313 billion and $502 billion, into 62 Belt-Road countries over the next five years, Hong Kong based analyst at Credit Suisse Group AG Shen Hu wrote.

While Indonesia has been a member of the OBOR program since its establishment in 2013, it has so far only reaped $5 billion to $6 billion in infrastructure investment from the initiative. The figure is much smaller compared to its peers; Pakistan has received $62 billion, while Malaysia has received $32 billion, said Thomas.

The government hopes to change this with President Joko “Jokowi” Widodo’s attendance next week. He will have to compete with 28 heads of state, including those from six other ASEAN members and 12 European countries.

Indonesian Chamber of Commerce and Industry (Kadin) deputy chairperson of international relations Shinta Widjaja Kamdani urged Indonesia to be more proactive as $359 billion of investment is needed under the 2015-2019 midterm development plan (RPJMN), with state-owned firms only able to fund 63 percent.

“We have toll roads, sea ports, airports and power plant projects that are in line with the OBOR program. The government must find a way to offer these projects with enticing investment schemes,” she told The Jakarta Post.

Economist Ari Kuncoro from the University of Indonesia agreed with the government’s decision to offer only a few regions, but said the country needed to carefully assess the decision. “There should be a clear road map on how we want to join. Indonesia needs to offer a conscientious concession for mutual benefits,” he added.

The OBOR program is suitable for cities that were covered in the old trade route between China and Indonesia, such as Sabang in Aceh, Medan in North Sumatra, Batam in Riau islands and Pontianak in West Kalimantan.

However, Ari suggested that they not be specifically offered to OBOR, but also to Japan and the United States, all of which have interest to grow as the world’s leading economic hub.


Stefani Ribka contributed to this story