India-Indonesia trade and economic cooperation
India-Indonesia trade and economic cooperation
Trade between India and Indonesia has grown significantly since the early 1990s. From around US$280 million in 1991, the volume crossed the $1 billion mark in 1996 to reach approximately $1.4 billion. However, due to the economic crisis in the region, trade has suffered a setback. To provide impetus and to review trade relations in the wake of the economic crisis, an official delegation from India visited Indonesia in June 1998, and had extensive meetings with official and business circles.
The visit of His Excellency Mr. Farid Moeloek, Indonesian health minister, to India in September 1998 provided an opportunity for members of Indonesian industry, particularly pharmaceuticals, to interact with their Indian counterpart. As a result of the positive impact of the visit, a pharmaceutical and chemical delegation from India will visit Indonesia in February this year to explore business and investment opportunities. A commercial delegation from Gujarat, which is a major industrial state in India, will visit Jakarta toward the end of January. India has also offered Indonesia a proposal for countertrade, which is under consideration.
Economic and commercial cooperation between India and Indonesia is to the mutual benefit of the two countries. After the economic problems of the 1960s in Indonesia and subsequent liberalization measures, a number of Indian companies came to Indonesia to explore business opportunities, particularly in areas such as textiles, steel, transportation, hotels, engineering, construction and consultancy. Some of these did well, establishing profitable businesses and contributing to the development process in Indonesia. In turn, as part of Indonesian investment in India, the Sinar Mas Group has established a state- of-the-art paper manufacturing plant in Pune, with investment of about $250 million, which has contributed to the process of upgrading technology in the sector in India.
Over the years, as part of its commitment to South-South cooperation, to share its expertise and experience in the area of science and technology and foster close cultural and people-to- people relations, India has offered about 80 scholarships annually under various programs to Indonesian scholars, students, technical experts and officials. Over 700 Indonesians have received training in India under these programs. With renewed emphasis on South-South cooperation, it is expected these numbers will increase in coming years.
While the economic crisis has brought its problems, there are at the same time windows of opportunity worth exploring. There is need for the two countries to look again at each other. For example, Indonesia can benefit from India's achievements in the information technology sector.
The drug and pharmaceutical industry in Indonesia can look toward India not only for the purchase of bulk drugs, but also formulations, which India is exporting to the U.S. and other Western countries.
Arrangements can be worked out for export of agricultural and allied commodities, such as rice and processed meat. India already exports meat in large quantities to Malaysia and the Philippines.
Indonesian companies may also examine and evaluate Indian technology products, which are suitable and competitively priced, to suit their requirements. On the other hand, India can pick up commodities from Indonesia in which the country is so rich. Import of items such as coal, palm oil, pulp and paper, cashews, spices, wood and other products have already registered a significant increase.
Since the early 1990s, India has been working for closer ties with Indonesia and other ASEAN countries as part of its "Look East" policy. These efforts and India's becoming a sectoral dialog partner and, in 1996, full dialog partner for the grouping, has provided impetus to the development of relations. The economic crisis in the region, however, has led to the revision of the various targets hoped to be achieved by the turn of the century.
India, nevertheless, considers the crisis a transitional phenomenon. India has stated in clear terms that it looks toward the region for a strategic partnership and is willing to engage in maximum cooperation to expedite the process of economic recovery.