RI-China deals<\/p>\n
The string of economic, education and research cooperation
\nprojects and loan agreements signed in the presence of President
\nSusilo Bambang Yudhoyono and President Hu Jintao in Beijing on
\nThursday reflect the high confidence these two countries have in
\nthe future outlook of their relations.<\/p>\n
Several billion dollars worth of China-Indonesia joint
\nventures in the development of oil refineries, highways, power
\nplants and coal transportation projects are also in the pipeline.<\/p>\n
All this is the result of the strong commitment of both
\nPresidents Susilo and Jintao to translate the Strategic
\nPartnership Agreement they signed in Jakarta earlier in April
\ninto concrete, feasible cooperation projects for mutual benefit.<\/p>\n
The partnership agreement, which serves as an overarching
\npolitical umbrella for cooperation, has maintained the momentum
\nof the positive developments, especially in terms of bilateral
\neconomic ties, which have been thriving since the reopening of
\ndiplomatic ties in the early 1990s.<\/p>\n
Both leaders fully realize that even though their countries
\noften compete fiercely with each other over a number of
\nindustrial exports, their economies actually complement each
\nother in many areas -- China's insatiable appetite for raw
\nmaterials and Indonesia's abundance of natural resources.<\/p>\n
Indonesia badly needs foreign technology and capital to
\ndevelop its natural resources, while China, with more than US$710
\nbillion in foreign exchange reserves, has been shopping around
\nthe world to secure stable sources of raw materials.<\/p>\n
Indonesia can benefit from the booming $1.6 trillion Chinese
\neconomy and China in turn can secure the supplies of various raw
\nmaterials by investing directly in natural-resource based
\nprojects in Indonesia.<\/p>\n
The robust pace of China's economic growth over the past two
\ndecades has indeed made its manufacturing sector sizzle with an
\ninsatiable demand for raw materials.<\/p>\n
For example, China's oil demand has been increasing by more
\nthan 25 percent a year, making it the world's second largest oil
\nimporter after the United States. This has forced China to secure
\na stable source of oil supplies by acquiring concessions from
\naround the world, including Indonesia.<\/p>\n
China National Offshore Oil Corp. (CNOOC) and China National
\nPetroleum Corp. have been investing tens of billions of dollars
\nin acquiring interests in upstream oil entities in dozens of
\ncountries, including Indonesia. China also has signed a long-
\nterm contract to import 2.6 million metric tons of liquefied
\nnatural gas annually from the Tangguh gas field in Papua,
\nstarting within three to four years.<\/p>\n
Indonesia has abundant coal resources, which China badly needs
\nto fire its power stations and manufacturing industries. Some
\nanalysts estimate that China today uses almost 35 percent of the
\ncoal in the world.<\/p>\n
Given these mutual benefits, the objective of expanding the
\ntwo-way trade to $30 billion in 2010 from $13 billion last year
\nis not too tall an order in view of the robust increase in
\nChinese investment in Indonesia because trade and investment is
\nclosely interlinked.<\/p>\n
It is the right policy on the part of the government to direct
\nChinese investments to specific sectors such as energy and basic
\ninfrastructure in view of Indonesia's large amount of petroleum
\nimports and inadequate infrastructure, which have eroded the
\ncountry's economic competitiveness.<\/p>\n
This investment targeting policy will also be effective in
\nenhancing development with equity to correct the disparities of
\ndevelopment between provinces or regencies and wide gap of income
\nbetween groups of people caused by the growth-led development
\npolicies of the past.<\/p>\n
However, the big business deals with China should not lull the
\ngovernment into complacency when it comes to doing its homework,
\nas it still needs further improvements to the overall investment
\nclimate.<\/p>\n
The first group of Chinese investors, who have entered
\nIndonesia consists mostly of state companies. But this capital
\ninflow will not be sustainable without the support of private
\ninvestors from China.<\/p>\n
The problem though is that most foreign investors remain
\nwaiting on the sidelines, expecting significant improvements in
\nthe business climate. Investors are willing to stake out their
\ncapital only when the general business climate already meets the
\nminimum degree of physical, legal and institutional
\ninfrastructure.<\/p>\n
--------------<\/p>", "url": "https:\/\/jawawa.id\/newsitem\/ri-china-deals-1447899208", "image": "" }, "sponsor": "Okusi Associates", "sponsor_url": "https:\/\/okusiassociates.com" }