Historical, political and cultural binds between Indonesia and India prove too strong for challenges to shake years of good relations between the two countries, with the most recent incident involving Indians and Indonesians in Batam now only a distant memory.
“We are now in the process of settling the issue out of court. We have tried to develop a solution that will be acceptable to all. However, such an isolated issue has no effect on our relations,” Indian Ambassador to Indonesia Biren Nanda said in an interview recently as the country gears to celebrate its national day this week.
About 10,000 local workers at a dry dock in Batam, south of Singapore, went on a rampage attacking their Indian colleagues injuring four and torching vehicles last April after they accused an Indian national supervisor for insulting a local worker.
Representatives of Indian employers have apologized subsequently, calming the situation in the island.
Nanda said more major Indian firms are investing their money in various sectors in Indonesia - from consumer products to vehicles or from coal mining to green energy.
The total two-way trade also jumped by 29 percent to US$3.7 billion in the first four months of the year, from $2.8 billion in the same period last year.
The bilateral trade is expected to achieve a higher level this year, compared to that of last year despite a 4.2 percent decline to $9.64 billion in 2009, from $10.06 billion in 2008, due to a global economic slowdown.
Nanda said because of the favorable economic condition in Indonesia and the potential benefits of the Indian-ASEAN free trade area (FTA) agreement, a number of Indian companies have even used, or have planned to use, Indonesia as their production base to cover the whole Southeast Asia region.
“Indian motorcycle producer, TVS, for instance, is exporting motorcycles to the Philippines from its Indonesian factory,” he said.
“Tata Power, which owns 20 percent of PT Bumi Resources, has placed its bid for a geothermal project under the 4,000 megawatt geothermal plant set by Indonesia’s energy and mineral resources ministry.”
Recently, he said, some Indonesian businesspeople had approached him to seek the possibility of Indian companies investing in wind turbines for Indonesia.
“I have invited Suzlon Energy, which is the number three wind generation company in the world, to invest in Indonesia. The company representatives have come here. But the Energy and Mineral Resources Ministry has to determine a clear tariff for energy generated from wind turbines. Therefore, we are now waiting for some kind of policy emerging for wind energy like what we have on geothermal,” he said.
Some Indian companies producing solar energy and electric cars would also have interests in investing in Indonesia, Nanda said.
Despite the blossoming business relations between the two countries and excellent political relations, Nanda said the challenges ahead were to elevate commercial relations up to their potential and encourage people-to-people contacts.