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27 March 2010

Indonesia wants China to invest in joint ventures

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Indonesia is urging China to invest here instead of mainly being a trader, and to back a “win-win solution” in the implementation of the free trade agreement between Asean and China (ACFTA), reported the Jakarta Post.

Industry Minister Mohamad Suleman Hidayat said Thursday that during the visit of Chinese Prime Minister Wen Jianbao to Jakarta on April 23, there would be “some important programs” to discuss, including future Chinese investment in Indonesia. His visit is part of the celebration of the 60th year of Sino-Indonesia relations.

“I’ve asked the Chinese [industry] minister to [help create more] concrete cooperation — [by having] his manufacturers come here and join with our manufacturers in joint investments,” Hidayat told reporters at the ministry.

“Don’t just export all the time. This is also part of a win-win solution in the ACFTA.” With the full implementation of the ACFTA early this year, the government effectively has scrapped 6,682 tariff lines in 17 sectors, including 12 in the manufacturing sector and five others in the agriculture, mining, maritime sectors.

An influx of manufactured products from China is expected following these changes. Similarly Indonesia will enjoy zero duties in China on its exports, most of which are raw materials, unlike Chinese exports which are mostly manufactured products.

Indonesia exports to China liquefied natural gas and mining commodities including coal and bauxite as well as agricultural commodities such as crude palm oil and cacao. Indonesia also exports some manufactured goods like fabrics and jamu (herbal medicine) to China.

On the other hand, Indonesia imports a large number of manufactured goods from China, such as steel products, footwear, garments, food and beverages, ceramics, plastic-made products, toys, chemicals, furniture, electronics, machines, electronic devices, electrical components, IT products, tools and herbal medicines.

During the visit of Prime Minister Wen, Indonesia and China are also expected to discuss other issues, including defense. Foreign Minister Marty Natalegawa said earlier a strategic partnership with Beijing would be all-encompassing and comprehensive, including defense cooperation.

The strategic partnership has translated into a number of cooperation deals, including joint military production which started in 2008 and an extradition agreement signed in 2009.

Indonesia has also conducted joint military training with China, whose military budget is the world’s second-largest after that of the United States.


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