Indonesia's security OK for investment, says China

Berni K. Moestafa, The Jakarta Post, Jakarta

A visiting Chinese government delegation said the country had no qualms about investing in Indonesia despite the simmering threat of terrorism here, according to a senior Indonesian government official on Wednesday.

The foreign ministry's director general for Asia Pacific and African Affairs, Makarim Wibisono, said China was planing to increase the value of its investment in Indonesia.

"They're not too concerned about matters like security," Makarim said after meeting with Chinese Vice Minister of Foreign Affairs Wang Yi during the seventh senior official bilateral consultation meeting in Jakarta. The last time the two countries held the consultation meeting was in February 2000 in Beijing.

During the over five-hour meeting at the foreign ministry, the two sides discussed bilateral ties and developments on the regional and global fronts, including terrorism.

Over the past few years, China has been increasing its economic presence in Indonesia, particularly in the oil and gas sector.

An influx of Chinese products has also swamped the domestic market, prompting local manufacturers to demand tariff protection.

Foreign investment analysts have warned of China taking over investment opportunities in Indonesia that Western investors deem too risky given the current security condition in the country.

China is downplaying security concerns in Indonesia just as many traditional foreign investors are refusing to enter the country because of security jitters.

In the past, the security concerns of foreign investors revolved around social unrest, separatist violence and labor problems, but now terrorism has moved center stage.

A string of bombings, the deadliest in Bali with more than 190 people killed, has moved security to the top of the list of investor concerns like no time since the May 1998 riots.

Makarim said the Chinese delegation expressed satisfaction over Indonesia's handling of the Bali bombing case.

The consultation meeting came a day after Beijing approved its first-ever loan agreement to Indonesia.

Worth US$400 million, the loan will help fund infrastructure projects in Indonesia. Tuesday's loan deal also marks a break from Indonesia's reliance on traditional creditor countries under the Consultative Group on Indonesia (CGI).

China's recent positive gestures to Indonesia also follow on the heels of an aborted visit by Taiwanese President Chen Shui- bian. Taiwan canceled the visit after Jakarta said President Chen would not be welcomed.

China, which treats Taiwan as a rebellious province, earlier warned Indonesia not to meet with Chen.

Although Indonesia does not have diplomatic ties with Taiwan, the two countries have extensive economic ties. Taiwan is one of Indonesia's main importers of liquefied natural gas and has proposed a new import deal after Jakarta lost out to Australia to supply $10 billion worth of LNG to China's first-ever LNG receiver-terminal.

Asked how the Chinese delegation responded to President Chen's canceled visit, Makarim said "they hailed Indonesia's decision".