Indonesia-EU relations: Stage set for big leap in the year 2005
Indonesia-EU relations: Stage set for big leap in the year 2005
Veeramalla Anjaiah, The Jakarta Post/Jakarta
Indonesia, the world's fourth-most populous nation, and the
world's most powerful regional grouping, the European Union (EU),
opened a new chapter in their bilateral relations in 2004 by
increasing their interaction on economic and political fronts.
Indonesia's trade with the Europe has been growing since the
Asian financial crisis in 1997, a top EU official says.
"In 2003, the value of EU imports from Indonesia stabilized at
around 10 billion euros (US$12.5 billion), confirming the trend
of the last three years and representing a 40 percent increase,"
the first secretary of the EU delegation to Indonesia, Raffaele
Quarto, told The Jakarta Post.
"This compares to the pre-crisis level EU exports to
Indonesia, which were also relatively stable at around 4 billion
euros, compared to the 7 billion euros in 1996."
The EU is Indonesia's second-largest trading partner after
Japan and a main destination for Indonesia's main exports --
agricultural goods, textiles, heavy machinery, chemicals and
energy -- with the balance of trade always in Indonesia's favor
(see graph).
Thanks to a stronger euro against the greenback, Indonesian
exports to these markets are set to increase in 2005, while
imports may decrease in the future because of a weak rupiah.
EU nations saw Indonesia's first-ever direct presidential
elections in 2004 positively and the country was emerging as a
formidable democratic state, Quarto said.
President Susilo Bambang Yudhoyono's government and its
commitment to economic and political reform had also drawn the
attention of the European investors, he said.
"After the formation of the 'business and market-friendly
Cabinet,' we believe investors from the EU countries will come
back to Indonesia next year," Quarto said.
The investors -- mainly from Britain, Germany, France, Italy
and Poland -- wanted to invest in areas like oil and gas,
telecommunications, the retail sector, energy, defense and the
banking sector, he said.
Since the crisis, Indonesia has experienced political
upheavals; three different presidents in six years; terror
attacks, legal uncertainty, regional autonomy that has perplexed
potential investors, along with labor unrest and a decline in law
and order.
As a result, foreign direct investment has been declining in
recent years.
In 2002, EU investment in Indonesia dropped to 362 million
euros from 698 million euros in 1999.
Indonesia, a country with 220 million population and abundant
natural resources, and the EU -- a grouping that has some 455
million people in 25 member states with a combined gross domestic
production (GDP) of 10 trillion euros -- needed each other to
foster stronger economic ties, Quarto said.
However, stronger economic ties are not enough to form a
strategic partnership between Indonesia and the EU, given the
fast-changing political landscape of Asia, and the two parties
have taken steps to strengthen their political ties.
Through its Council of Ministers of Foreign Affairs, the EU
had announced it wanted a united, democratic, stable and
prosperous Indonesia. It also supported Indonesia's territorial
integrity, Quarto said.
Indonesia, meanwhile, has prepared itself to tap into the
opportunities of the EU after the enlargement in May 2004.
With a series of seminars, photo exhibitions and arts
performances, a "Europe Week" was held in Jakarta to mark the
enlargement.
As part of this relationship building, Dutch Foreign Minister
Bernard Bot, whose country holds the Presidency of the European
Union, visited Jakarta twice --- first in August and later in
October -- meeting President SBY and Hassan Wirayuda.
EU trade commissioner Pascal Lamy, meanwhile, went to Jakarta
in September 2004 to attend ASEAN trade ministerial meeting,
while commissioner on external relations Chris Patten earlier
came to the city in June to attend the ASEAN post ministerial
conference and ASEAN Regional Forum meetings.
In July, the European Commission (EC) -- the executive arm of
the EU -- and Indonesia signed an agreement to launch the two-
year National Indicative Program (NIP).
The EC allotted 72 million euros in financial grants to
Indonesia (for the period 2005-2006) -- money to improve the rule
of law, security and public finance management.
The NIP is a part of the EC's Country Strategy Paper (CSP),
which was adopted in June 2002.
"The EC has so far contributed around 400 million euros for
development assistance to Indonesia during the last 27 years,"
the EU Delegation's acting charge d'affaires Ulrich Eckle said.
The biggest contribution from the EU in 2004 was its
assistance to the Indonesian elections, donating 7 million euros
to help their organization and sending its largest-ever election
observation mission to monitor the April 5, July 5 and Sept. 20
polls.
Through a range of programs, the EU wanted to support reform
efforts, particularly in the field of judicial change, good
governance practices, along with measures to fight graft
sustainable management of natural resources and poverty
alleviation, Eckle said.
In an effort to promote mutual understanding and respect
between the people, the EU encouraged people-to-people dialog,
cultural interaction and meetings between legislators, religious
groups and civil society, he said.
Indonesia and the EU have agreed to hold political meetings
involving senior officials every year. The last meeting was held
in Yogyakarta in May.
"This new format reflects the agreement on both sides to
strengthen Indonesia-EU relations," Indonesian Foreign Minister
Hassan Wirayuda said.
There is also a ministerial-level meeting in which the EU
Troika and Indonesian Foreign Minister are the participants.
The troika meeting, held in November, comprises the sitting EU
Council Presidency, the member state which takes the future
presidency and the EC.
While there many cultural contrasts between the EU and
Indonesia, delegates from both sides say these difference are
also strengths, and they are upbeat about the relationship's
future; a partnership for prosperity and peace.