FOR OCTOBER 3

Relations between Germany and Indonesia sound and profound

Opening this special coverage are excerpts taken from an interview with German Ambassador to Indonesia Dr. Gerhard Fulda on the relations between Germany and Indonesia.

First of all we would like to congratulate you on Day of German Reunification and subsequently we would appreciate having an exchange of ideas on German-Indonesian relations.

What were the highlights of the German-Indonesian relations during the past 12 months?

First, the visits of our Foreign Minister Joschka Fischer in November last year as well as our Federal President Johannes Rau in February 2001 and numerous parliamentary delegations -- including, among others, the vice president of the Bundestag, Ms Anke Fuchs, in Nov. 2000 -- were of outstanding significance for our relations. These visits have demonstrated that Germany is on Indonesia's side as she moves on her way toward democracy and in her efforts to solve the severe economic and social problems she is facing. Furthermore, we strengthened and fostered a great number of contacts in the domain of culture, scientific, economic and political affairs, i.e. Government-to-Government negotiations in the field of Development Cooperation in October 2000 -- the first after the beginning of 1998.

Ambassador, what are the most significant domains of interest of the German-Indonesian partnership?

The most important pillars of German-Indonesian relations are not an abstract but it is the people who stimulate and bring to life a partnership -- or even better -- a friendship between Indonesia and Germany. As early as in the 16th century Germans lived in Indonesia, explored the country and its people and did a lot of trade with them. Today, there are Germans who take pleasure in living in Indonesia, working for more than 150 large- scale and small-scale companies, or as development experts, scientists and as teachers. On the other side, there are all those Indonesians who in several ways feel close to Germany, particularly the 2,000 young Indonesians who are currently studying in Germany. This allows the conclusion that the most important topics of German-Indonesian relations may be found in the domain of trade and investment, development cooperation, common research and cultural exchange.

Does the transition from President Abdurrahman Wahid to President Megawati Sukarnoputri have any effect on the German- Indonesian relations?

The close relations between Germany and Indonesia were sound and profound before President Abdurrahman was elected and will continue to be so. The relations between two nations are developing independently of the actual governments -- as already lined out -- they are created and sustained by many people.

However, with regard to the new government of President Megawati, I cherish hopes that the so far stagnating reforms of the economy and of the legal sector will regain momentum. This will be the paramount prerequisite to lure German investors back to Indonesia to contribute to create dearly needed new job opportunities.

How does Germany support the reforms going on in Indonesia?

After the crises started in 1997, Germany swiftly reacted by offering special support, such as helping bring about the reform of Bank Indonesia or establish an independent Commission for Competition. An estimated DM300 million was made available to secure relevant imports and to strengthen small- and medium-scale companies in Indonesia. We offered to convert accumulated debts into projects for preservation of nature or poverty reduction. These proposals are being scrutinized right now by the Indonesian side. And in the framework of the German-Indonesian Development Cooperation, Germany has deepened and widened her consultancy to support the decentralization-efforts.

How do you rate the prospects of decentralizing the government-administration in Indonesia?

My government holds the view that an effective decentralization policy is imperative to secure and maintain national integrity in Indonesia. Like many other partner- countries of Indonesia, we, too, are pleased to perceive that the process of reforms is pushed ahead by the government with great commitment and endeavor. Administration on district level must be strengthened to ensure full participation of local stakeholders in the process of decision-making. However, we are worried that some Kabupaten (regencies) might misuse their newly gained authority to uncontrollably exploit Indonesia's natural resources and here, as case in point, the rain forests. Introducing new and inadequate levies and taxes will heavily impair the business climate for domestic and foreign investors However, I am positive that these are vanishing side-effects of a doubtlessly difficult transitional period.

The topic of decentralization was top priority on the agenda of the last CGI meeting. The same applies to the Indonesian forestry policy and the eradication of corruption. Will Germany, this year, again, continue to give financial support to the development cooperation ?

As in the past, Germany, together with the international donor-community, will not deny her solidarity to Indonesia, even though we do not disregard or overlook the stagnation shown in some domains of reform, such as the sector of forestry. Moreover, with regard to our bilateral development cooperation, a few problems still remain to be solved until the next bilateral government to government negotiations in the field of development cooperation will take place by the end of October this year.

The government agreement for the Financial Cooperation 2000 has yet to be signed, two relevant projects for drinking-water supply in Bengkulu and Palembang are running the risk of failure, as partner contributions are pending. I should like to appeal to our Indonesian partners to find a quick solution to this problem. However, considering my experience so far in Indonesia, I am definitely positive that these obstacles will be removed soon.

How have German and Indonesian economic relations developed during and after the crisis ?

The economic and financial crisis had indeed an impact on Germany's economic relations with Indonesia. But only in terms of numbers relating to trade and investment. German companies did not leave Indonesia. They stay in good times as well as in bad times. Therefore, some of them can look back to a history of 150 years in this country. In 1999, in the middle of the crisis, Germany organized the Technogerma in Jakarta -- against many warning voices. It proved to be a very successful event with about a half-million visitors and more than 200 exhibitors. The Technogerma coincided with the opening of the German Center in Bumi Serpong Damai, which offers especially the German small and medium sized sector an excellent platform for an engagement in Indonesia. All of this reflects the long-term approach of the German engagement in Indonesia.

This approach is based on a business philosophy which sticks to commitments in difficult times, on partnerships with mutual benefits and on developing a comprehensive understanding of the cultural and social conditions in the country where they do business. Some companies even took the opportunity to enhance their engagement in Indonesia, upgrading their production facilities, adding capacities and some even investing here for the first time. This positive development of the post crisis era after 1999 is reflected by the trade and investment figures for 2000: Our bilateral trade volume grew by 25 percent after it had declined by around 20 percent in the two previous years. This again made us Indonesia's most important trading partner in Europe. German direct investment even grew tenfold between 1999 and 2000, moving us up to fourth place worldwide.

What are the perspectives for German-Indonesian economic relations in the coming years?

Today, we see the interest of the German business community in Indonesia on the rise again. By this, German companies, although still cautious, acknowledge the economic improvements and welcome the new political stability. I feel that we will see bilateral trade staying on its growth path and more investments coming in.

In this context I would like to congratulate the Indonesian government on its decision to stimulate private investments by creating the right conditions: less corruption, an environment based on good governance, a sound legal and institutional framework and a strong financial and corporate system. It is my conviction that Indonesia remains to be a most interesting market. Especially for those who dare to take their chances now.

Indonesia is on the right path. It deserves our cooperation. And I am sure it will offer adequate returns.

Ambassador, you have been to Indonesia for more than a year now. What have you seen of our country up to now ?

A great number of trips have led me to many places on the archipelago. I have met with rich and poor, a society in transition. I was delighted to see the most beautiful landscapes of this world. I am encouraged by witnessing the upspring of an active, democracy-oriented civil society.