Indonesia, China ink $17.4 billion deals

BEIJING. Indonesia inked dozens of business and strategic agreements in several sectors with China, Asia’s largest economy, during the state visit of President Susilo Bambang Yudhoyono to Beijing on Friday.

The signings were made after talks with Chinese President Hu Jintao, in which both sides reaffirmed the importance of bilateral relations.

The agreement covered cooperation in areas including trade, tourism, anti-drug efforts and fisheries management.

In the business sectors, Indonesian companies signed 15 investment agreements with Chinese corporations in Beijing on Friday worth a total of US$17.4 billion.

“The business agreements are an indication of the growing cooperation between the two countries,” President Yudhoyono said in a speech after meeting with Wan Jifei, the head of the Chinese Council for the Promotion of International Trade at a hotel in China’s capital city.

Among the agreements signed was a technical cooperation agreement between Indonesia’s state-owned steel company PT Krakatau Steel and China’s Capital Engineering and Research Inc. Ltd., as well as a deal to lend $200 million in long-term credit to finance the construction of Krakatau’s Blast Furnace Complex.

Also signed at the gathering was a joint investment between PT Bangungraha Sejahtera Mulia and China Railway Construction for the Sunda Strait Strategic and Infrastructure Development.

Bangungraha is a member of the Artha Graha Group owned by business tycoon Tomy Winata. Tomy, who was also present in Beijing, said that he hoped that Chinese business groups would finance the entire Sunda Strait project, estimated to be worth about $12 billion.

“We have begun talks with major Chinese businesses and they have proceeded very positively. I hope within 30 days we will hear something good,” Tomy told Indonesian journalists.

According to Trade Minister Gita Wirjawan, Chinese corporations had also agreed to invest up to Rp $6 billion to help construct infrastructure in Indonesia, such projects including highways, ports and industrial estates.

These business deals, Gita said, could pay off the 2011 trade deficit between Indonesia and China, which analysts had blamed on the “problematic” ASEAN–China Free Trade Agreement (FTA).

“We have seen positive growth of Indonesia’s trade to China and we are starting to see more balanced trade volumes between exports and imports,” Gita said.

Indonesia has benefited from booming Chinese demand for its commodities, such as palm oil and tin, and is seeking additional Chinese investment.

Last year’s bilateral trade of $60.5 billion, however, was heavily in China’s favor and Indonesian firms have complained of a flood of cheap Chinese goods allowed under a 2010 free trade agreement, according to Associated Press.

In addition to business deals, the Indonesian and Chinese governments also made six agreements in numerous sectors.

Foreign Ministry Marty Natalegawa, for example, signed a Memorandum of Understanding (MoU) on maritime cooperation with his Chinese counterpart.

Head of the National Narcotics Agency (BNN) Gories Mere also signed an agreement on drug control.

Other agreements include those in the sectors of statistical cooperation, archives and tourism.

However, none of the Indonesian officials in Beijing were eager to explain details concerning the agreements.

Also on Friday, Yudhoyono was conferred a honorary doctorate from Tsinghua University, which has been known as one of the world’s finest up-and-coming universities.

The conferment was conducted by the university’s President Chen Jining, who said, “President Yudhoyono has played a significant role in promoting peace in the region as well as in recovering from the crisis. He has been the key figure in boosting Indonesia’s economy,” Jining said.

Following the conferment, President Yudhoyono delivered his speech before hundreds of lecturers and students of the university, some of whom originated from Indonesia. (Bagus BT Saragih, The Jakarta Post)