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China remains committed to RI investment despite spat

China will remain committed to investing in Indonesia despite the ongoing dispute between the two countries over the former’s controversial naval maneuvers in Indonesia’s exclusive economic zone (EEZ) in the North Natuna Sea, China’s senior envoy in Jakarta has said

Adrian Wail Akhlas (The Jakarta Post)
Jakarta
Fri, January 10, 2020

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China remains committed to RI investment despite spat

China will remain committed to investing in Indonesia despite the ongoing dispute between the two countries over the former’s controversial naval maneuvers in Indonesia’s exclusive economic zone (EEZ) in the North Natuna Sea, China’s senior envoy in Jakarta has said.

Chinese Ambassador to Indonesia Xiao Qian said both countries had “wonderful relations” but “even good friends might have different views”.

“We can solve this problem through diplomatic channels as I believe it will not affect the economic and investment [relations] between China and Indonesia,” Xiao said on the sidelines of the China Business Forum held at the Indonesian Stock Exchange (IDX) building in Jakarta on Wednesday.

Diplomatic tension heightened between Indonesia and China over the past week after the latter's fishing boats and coast guard vessels entered the North Natuna Sea, the southernmost part of the disputed South China Sea.

President Joko "Jokowi" Widodo visited Natuna regency on Wednesday, giving a signal to his Chinese counterpart that he was paying serious attention to the maritime spat. Previously, the government had summoned the Chinese ambassador and lodged a diplomatic protest with Beijing.

The Indonesian and Chinese relationship is close as the East Asian country is Indonesia’s largest trading partner and one of its biggest foreign investors.

China imported US$23.54 billion of Indonesia’s non-oil-and-gas commodities in the January-November period last year, topping the list with a more than 16 percent share of the latter’s total exports, Statistics Indonesia data shows.

On the other hand, China shipped $40.51 billion of commodities to Indonesia, almost one third of the latter’s total imports during the same period, resulting in a trade deficit of $16.97 billion for Indonesia.

Meanwhile, Chinese investors realized Rp 46.3 trillion ($3.3 billion) worth of investment in the country through 1,619 projects in the January-September period last year, lagging just behind Singapore, according to Investment Coordinating Board (BKPM) data.

“Indonesia is always among the top-10 of China’s major overseas projects [such as] the landmark Jakarta-Bandung high-speed rail project that has begun construction,” Xiao said during his remarks at the business forum, adding that his country was also the largest importer of Indonesia’s palm oil products.

“We also recognize Indonesia’s potential in the capital market […] Chinese companies have been absent from this market up to now. This is a bit of a pity […] but the capital market cooperation has the prospect to become a brand new highlight in our bilateral cooperation,” he went on to say.

Indonesia was named one of the most preferred emerging markets by a Bloomberg survey of 57 global investors, strategists and traders on their outlook for 2020 with bonds and stocks among the most-favored instruments among investors heading into 2020.

“In my point of view, the spat will not harm the economic relationship between the two,” Chinese Chamber of Commerce chairman Zhang Chao Yang told The Jakarta Post at the event. He even called on Chinese companies operating in Indonesia to list their shares on the IDX over the next few years.

Coordinating Maritime Affairs and Investment Minister Luhut Pandjaitan said at the business forum that China had never asked for a trade-off for investment in return for sovereignty, adding that the economic relationship between the two countries “remained strong”.

“Indonesia and China are good friends. Sure there are some problems […] sometimes we fight [with each other] but it does not mean we [need to] divorce,” said Luhut, encouraging Chinese businesspeople and investors attending the event to invest in the world’s fourth-largest country by population.

“Do not hesitate to bring your investment here and I promise you will make a good profit in this country,” said Jokowi’s closest aide.

BKPM head Bahlil Lahadalia supported Luhut’s statement.

"The Natuna issue and investment are two different things as the Natuna spat is a [territorial] violation so let law enforcers solve it. […] We must convince investors, including those from China, that we have made changes [in business and investment regulations] and the [business climate] will be better going forward.” (dfr)

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