Indonesia asks China to help ailing IPTN and buy LNG

BEIJING (JP): Indonesia has asked China to help its ailing national aircraft manufacturer, IPTN, through a joint investment, Minister of Foreign Affairs Alwi Shihab said here on Tuesday.

"The market here is quite big and they have advanced aviation technology," Alwi told Indonesian journalists after attending a reception to celebrate the 50th anniversary of diplomatic relations between Indonesia and China.

"Besides, China has the money," he added.

Earlier on Tuesday, Alwi met Chinese Vice President Hu Jintao to discuss how Chinese aid to Indonesia could be translated into an "actual" and "practical" way.

Alwi said that China gave a positive response to the idea of the joint investment in IPTN.

"IPTN now has problems, while China has a big market. This can be a healthy combination. What's more, we already have the factory," he said.

Indonesia and China opened its diplomatic ties in 1950 but it was frozen in 1967 two years after an abortive communist coup which Indonesia then claimed involved China. The relations were normalized in 1990.

Some Middle Eastern countries had shown their interest in IPTN, but they always asked about the market, he said.

Alwi also proposed that China buy Indonesia's liquefied natural gas (LNG). "Why should they buy LNG from the Middle East if they can buy it from us."

China is expected to increase its investment in Indonesia, which represents only 0.15 percent of its total investments worldwide.

Alwi said that China was committed to providing export credit worth a total of US$500 million, but so far it had not been realized because of "insignificant technical matters." Among them is a high exposure fee.

China has agreed to reduce the fee but Indonesian businesses still consider the procedures to access the credit too rigid. "We can buy goods which are cheaper here than in the U.S. or Europe," he added.

He said that up to now, China's investment in Indonesia was low because of "psychological" obstacles. "Maybe there are some of us in Indonesia who are still reluctant to be all-out, but now that we have good relations with China, there should not be any more obstacles.

"China won't interfere in our internal affairs, and they have quite big potency."

He said China would be ready to help Indonesia restore its economy if Indonesia could create a climate that was conducive to investment, Alwi said.

"The Chinese vice president himself said this. It is not diplomatic talk. It came from his heart," he assured.

China was the first country officially visited by President Abdurrahman Wahid after he took power last October, which was followed up on Monday by the signing of a Memorandum of Understanding (MOU) on bilateral cooperation in the fields of politics, economics, science and technology and tourism.

Another document, concerning a joint commission to settle any problems that might emerge during the cooperation, was also signed at the same time.

Alwi said that China had agreed to declare Indonesia a tourist destination.

Indonesia now has a great opportunity to tap into the tourist market in China and to encourage Chinese people to travel to this country. This is due to the easing of the bureaucracy in applying for visas. The government may, if necessary, also reduce the visa fee. The President has authorized the Indonesian Embassy to issue visas without any clearance from Jakarta. "In the end, we might give them visas on arrival," Shihab said.

This policy, however, should be supported by the improvement of the immigration department in Indonesia. He admitted that the immigration officers often were suspicious about Chinese who planned to travel to Indonesia and were prejudiced that they would abuse their visas and become illegal immigrants in the country. Alwi also rebuked corrupted immigration officers who abuse their power and called them to clean up their acts.

Indonesia and China will also make an agreement on criminal matters, including repatriation. "In the future, there should not be matters like the Edy Tansil case," he said, referring to corrupted businessman Edy Tansil, who is believed to have fled to China. (sim)