Russia, RI to boost trade to $5b by 2014, expand ties

JAKARTA. Russia and Indonesia have pledged to forge closer relations in the economic sector by boosting trade to US$5 billion by 2014 and expanding ties in other potential sectors, including agriculture and infrastructure.

Coordinating Economic Minister Hatta Rajasa said on Thursday that cooperation between the two countries had increased significantly in recent years as marked by, among other things, surging bilateral trade and several planned investments by Russian companies. “Our bilateral trade this year has grown very fast. Up until June, trade reached $1.5 billion and we expect this figure to hit $5 billion by 2014,” he said after meeting a business delegation led by Russian Deputy Prime Minister Sergey B. Ivanov.

In his address during the opening of an Indonesia-Russia business forum later in the day, the visiting Russian deputy prime minister said that Russia and Indonesia could benefit from closer cooperation with win-win positions as both countries were developing their own economic master plans.

“We are upbeat that we have enormous potential to develop our cooperation, especially in the economic sector and trade,” he said, adding that both governments had committed to overcoming barriers in future cooperation.

Ivanov is leading 53 Russian delegates on their visit to Indonesia in a bid to strengthen bilateral relations.

Trade Minister Gita Wirjawan expects that Indonesia can balance its bilateral trade with Russia in the future with a target to reach an export value of $2.5 billion in 2014.

“Up to now, we export natural resources like palm oil and coal, but in the future we want to sell more value-added goods, such as textiles, footwear and electronics,” he said.

Last year, bilateral trade between the two countries was valued at $1.69 billion with a $466.74 million deficit on the Indonesian side.

Indonesia mainly exports commodities, such as palm oil, cocoa, tea, vanilla, textiles, footwear and furniture, while importing aircraft, military equipment and telecommunication tools.

Gita, who also chairs the Investment Coordinating Board (BKPM), also said that Indonesia expected up to $6 billion in investments from Russia following the visit.

Gita said that half of the investments would come from a unit of Russia’s Solway Industries, which planned to build a nickel smelting plant in Halmahera, North Maluku, while the rest would be made up by Russian Railways with an interest in constructing a resources railway line connecting Central and East Kalimantan provinces.

“Investment from Russia is still relatively small, but we hope that the railway project can be done,” Gita said.

He said that Russia’s investments were relatively small as a number of investments were not realized directly but through other countries, such as Singapore and Mauritius.

According to BKPM data, up to the first half of this year, only one project by a Russian firm worth $1.1 million was realized.

The director general of air transportation at the Transportation Ministry, Herry Bakti S. Gumay, said that so far Indonesia had “cooperated in manufacturing passenger aircraft with Russian aircraft maker Sukhoi”.

“There are already orders for Sukhoi Super Jet aircraft, 20 units from Kartika Airlines and 12 units from Sky Aviation. We hope with these orders, they will see our market as prospective,” he said, adding that a joint team between state aircraft maker PT Dirgantara Indonesia and Sukhoi had been set up.

The Indonesian Air Force operates 10 Sukhoi Su-27/30 jet fighters and is planning to buy more worth $470 million. (Linda Yulisman/The Jakarta Post)