Thu, 11 Nov 2010
As a six-year-old schoolboy, US President Barack Obama played barefoot in Jakarta’s narrow dirt lanes. Electricity was scarce, water was drawn from wells and a dictator ruled the vast, resource-rich archipelago.

Nearly four decades later, Mr Obama is on the eve of his first trip back to Indonesia since becoming president. As a member of the Group of 20 nations and a major emerging democracy of 237m people, south-east Asia’s largest economy is being wooed by Washington and Beijing as they jostle for regional influence.

Mr Obama will need to make up lost ground on the economic and trade front, however. As US investment has flowed to countries such as India in recent years, China has made significant inroads in Indonesia, purchasing coal, precious metals and investing in power projects. A trade agreement between Beijing and regional nations earlier this year increased Chinese-Indonesian trade flows.

The US president will sign a broad partnership agreement during his 20-hour stopover in the Indonesian capital to meet his counterpart, Susilo Bambang Yudhoyono.

Indonesians themselves have high hopes for the visit. “We were in the shadow of China and India, in terms of development, over the past 10 years or so,” Arifin Siregar, a former Indonesian ambassador to the US, told the Financial Times. “With the visit of President Obama we hope that the attention of the public in America will be more toward Indonesia.”

Having spent four years in Jakarta where he lived from age six to 10 with his mother, Ann Dunham, who married an Indonesian Mr Obama’s interest at least is assured. The young Obama went to Catholic and later a state primary schools, and played in a neighbourhood where Christians and Muslims lived side by side.

Old neighbours recalled a happy child who flew kites with the other local children and quickly adapted to his new surroundings, eating spicy street food and learning to speak Indonesian.

“I remember a very chubby boy running around wearing striped shirts,” said Djumiati Satjakoesoemah, 68, who lived around the corner. Mr Obama’s mother used to teach English in her home. “Wearing a sarong on his head like a ninja, he chased other children around without sandals on.”

While Mr Obama’s trip is a homecoming of sorts, he is expected to convey an important message of reconciliation to the Muslim world about the unpopular wars in Afghanistan and Iraq when he speaks at the University of Indonesia on Wednesday.

“He knows the Islam in Indonesia from when he was a child,” said Ali Mustafa Yaqub, the grand imam of Jakarta’s Istiqlal mosque which Mr Obama will also visit. “We hope he will build a bridge between the Muslims and non-Muslims of the world.”

The visit to Jakarta’s Istiqlal mosque could be politically risky for Mr Obama, whose opponents have in the past sought to undermine his popularity by claiming wrongly that he is a Muslim.

In Indonesia, meanwhile, the threat of terrorist attacks remains, but political stability, solid economic growth, fiscal reforms and low inflation have made Indonesia the darling of emerging markets this year. Foreign capital is flowing in at a rate not seen in more than a decade and is expected to top $18bn this year, and the stock market reached an all-time high on Monday.

Now, the country, which only recently recovered from the devastating 1997-98 Asian financial crisis, is aggressively seeking foreign investors to develop weak infrastructure, create jobs and lift growth beyond this year’s projected 6 per cent.

But while it sailed through recent global financial turmoil with one of the fastest growth rates in the world, foreign businesses often cite government red tape, weak legal system, corruption and crumbling roads, bridges and ports as major hurdles to investment.

And despite its economic progress, Indonesia is still blighted by natural disaster not only the 2004 tsunami. In recent weeks eruptions at the Mount Merapi volcano have killed more than 120 people, while a tsunami off of Sumatra left more than 450 dead.

Indonesia’s previous relationship with the US was hampered by its human rights record during the Suharto dictatorship, and military ties were cut under former president Bill Clinton. Reforms imposed under Mr Yudhoyono have vastly improved the situation, but police and soldiers rarely face prosecution for alleged crimes.

Earlier this year, the US said it would once again provide military assistance, including to special forces blamed for past abuses in remote regions such as Aceh, East Timor and Papua.

“Indonesia has made some good progress over the last decade, but that doesn’t mean President Obama should ignore other serious human rights problems,” said Sophie Richardson, acting Asia director at Human Rights Watch. “Obama should encourage Indonesia to take concrete measures to protect free expression and religious freedom, and to require accountability by the armed forces.”



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