Chinese President Xi Jinping will be the second state leader to visit Jakarta this week. Many are looking to see how the leaders of the world’s second largest economy and Southeast Asia’s largest economy can collaborate to cement Asia’s position as the world’s engine of growth.
Trade between the Indonesian archipelago and China dates back to the 7th century and it is trade that still serves as a cornerstone of Sino-Indonesian ties centuries later.
Chinese President Xi Jinping’s visit is seen as an important moment to further enhance each other’s economic prospects.
Makmur Keliat, head of international relations of the graduate programme at the University of Indonesia, said: “If something happens with Indonesia in terms of our economic performance, then it will also affect China. And the same is true also if the economy in China declines then it would affect Indonesian economy.
“I think the key to our bilateral economic relationship actually is in our growth — both China and Indonesia.”
In recent years, both countries have recorded impressive economic growth despite a slowdown in the global economy, and China is Indonesia’s largest trading partner. Bilateral trade more than doubled from US$26.6 billion in 2009 to US$66.6 billion in 2012, and is expected to reach 80 billion US dollars by 2015.
Indonesia, for the most part, imports equipment and machinery from China, while China imports Indonesia’s natural resources.
Despite being such a large trading partner, China’s investment in Indonesia is only US$2.2 billion — almost half of what Indonesia invests in China.
Tantowi Yahya, a legislator with Golkar, said: “Why is a big and important country like China putting so little investment in us? Why? This is what needs to be answered by us, by the President, honestly.
“Probably it’s because of the many obstacles that foreign investors face here from time to time. Something like uncertainty in law, the infrastructure, electricity. This is what has to be answered and find a solution.”
Indonesia’s ambassador to China with the Investment Coordinating Board aims to make China its fifth largest investor. He has met many of the country’s top 500 companies, and that one-on-one business and investment dialogue with Chinese investors is paying dividends.
Whilst in Indonesia, President Xi is expected to oversee the signing of US$20 billion of trade deals, including a joint venture to develop the Jakarta monorail system. Indonesian officials are also looking into extending their bilateral currency swap agreement with China to boost the rupiah, which has been substantially weakened.
During his visit, President Xi will also be making a special appearance before Parliament. President Xi Jinping will deliver a special address in front of Parliament — a rare honour and a first for a visiting Chinese politician.
Source : Channel News Asia | October 1, 2013