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NEWS UPDATES 21 May 2009

Indonesia, Qatar to boost economic, investment ties

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Indonesia and Qatar have taken steps to bolster economic and investment ties, including the establishment of a joint venture firm, supported by up to US$1 billion, to help back key development projects, reported local daily the Jakarta Post.

Qatari Emir Sheikh Hamad bin Khalifa Al-Thani arrived in Jakarta on Monday evening and paid a courtesy call to President Susilo Bambang Yudhoyono Tuesday, when they witnessed the signing of a  memorandum of understanding on economic and technical cooperation by the Qatari International Cooperation Minister and the Indonesian Foreign Affairs Minister.

Presidential spokesman Dino Patti Djalal said there would be cooperation covering multiple sectors, including trade, industry, energy, agriculture, transportation, infrastructure and tourism.

“[There are MoUs] also covering exchanges of science and technology as well as of expert staff, technicians and trainers,” Dino told the press after the meeting.

The two leaders have also agreed to immediately finalise the planned establishment of a joint investment company between Indonesia and Qatar backed by a total fund of $1 billion; 85 percent of which will be provided by the latter and the remaining 15 percent by the former.

Yudhoyono has suggested that the joint funds be used to finance projects managed by Indonesian state enterprises, such as electricity projects for rural areas, Dino said.

The Qatari Emir expressed in his brief visit an interest to order medium sized CN235 turbo-prop aircraft from Indonesia’s state aircraft manufacturer PT Dirgantara Indonesia.

Responding to Yudhoyono’s request, the Emir also agreed to boost tourism cooperation between the two countries, saying Qataris had a big interest in the archipelago, especially given Indonesia’s  status as the world’s most populous Muslim nation.

Qatar is currently home to about 27,000 Indonesian  migrant workers, most of whom are skilled workers  employed in hotels, airlines and the oil and gas industries.

Yudhoyono has asked the Qatari Emir if he can help to open up more work opportunities for Indonesians in his country.

Dino said the economic agreement with Qatar was part of current Indonesian efforts to diversify and explore new non-traditional markets to help compensate for the decline in traditional markets (such as the US, Japan and Europe) hit by the global economic downturn.

He said Yudhoyono had expressed his thanks to the Qatari Emir for the country’s increasing investment portfolio in Indonesia, including in the telecommunications company PT Indosat.

“We can be assured that this is part of a wider investment trend in Indonesia because usually when such a [Gulf]  country sees the benefits of investing here, its [regional] counterparts will [hopefully] see it as a model and follow suit.

“So we expect that more investors from Qatar, and Arabian and Middle Eastern countries will also come to Indonesia,” Dino said.

He added that the Qatari Emir had hailed Indonesia as one of the strongest economies compared with other countries, not just in southeast Asia, but in all of Asia.

Indonesia’s main exports to Qatar include paper, stationery and plywood. Qatar’s main exports to Indonesia have been dominated by natural gas (LNG).

According to data from the Indonesian Trade Ministry, two-way trade volumes between the two countries continually increased from 2003 to 2007, with Indonesia  normally enjoying  a trade surplus.

However, in 2008 as the value of two-way trade again increased, by 85 percent to $348.56 million from $188.21 million in 2007, Indonesia came into trade deficit with Qatar, with its total export volume sliding by 41 percent down to $85.92 million from $146.36 million.

This was prompted by a decline in its main exports to Qatar.

Indonesia has been seeking investment from cash-rich Middle-Eastern countries, at a time when traditional investors in developed countries are suffering from the drying up of liquidity, which has affected previous patterns of world investment flows.


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