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.