FOR OCTOBER 3

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.