~Oei Eng Goan

~Oei Eng Goan The Jakarta Post Jakarta

Political and economic relations between China and Indonesia have enjoyed such rapid progress that Chinese Ambassador to Indonesia Lu Shumin calls it the best period of development following the resumption of full diplomatic ties in 1990. Ambassador Lu attributed the solid ties to both sides adopting a policy of mutual trust and respect, good neighborhood and comprehensive cooperation, boosted by the support of neighboring countries in the region. "So I believe that no matter what happens, our two peoples and countries are determined to continue friendly ties to achieve greater goals in the future that benefit the two nations," Lu, who assumed his ambassadorial post in Indonesia about a year ago, told The Jakarta Post in a recent interview. He also praised Jakarta's adherence to the One-China Policy, which acknowledges and recognizes the People's Republic of China as the sole representative of the Chinese people and government and that Taiwan is an integral part of China. The policy was demonstrated by the Indonesian government when it officially rejected a visit made by Taiwan's Vice President Annette Lu to Jakarta last year, as well as a later planned visit by President Chen Shui-bian in his bid to expand Taiwan's "southward policy". "From our point of view, the Chinese government does not oppose exchanges of people to people and economic ties (between Taiwan and Indonesia), but we absolutely oppose the official ties (between Taipei and Jakarta). We truly appreciate the Indonesian government's adherence to the One-China Policy," he explained. Although relatively new to Indonesia, Lu said he witnessed the significant changes the Jakarta government made in moving toward a more democratic country and in its bid to maintain national stability and unity, which would eventually help promote regional peace and stability. He noted the tremendous changes in the country since the tumultuous downfall of Soeharto in 1998, which was accompanied by bloody student demonstrations and mass riots. He recollected the relative calm that accompanied the passing of legislation in the House of Representatives (DPR) last year for establishment of political parties and the general election in 2004. "Although there were demonstrations and protests, but the number of protesters was much smaller in scale compared to 1998. This means that there has been improved stability in Indonesia," he said. "Smooth development can only be achieved when there is political and social stability and Indonesia, (and) especially the government of President Megawati (Soekarnoputri) has made every effort to achieve that goal. Even though the country was hit hard by the economic crisis of 1997-98, Indonesia last year could still reach economic growth of 3.6 percent, which was not bad. "So I believe that, thanks to the wisdom and hard work of the people, Indonesia will overcome this temporary difficulty and enjoy a better future." The Chinese ambassador told the Post that bilateral trade had flourished since the normalization of ties, with nearly US$8 billion recorded last year, and always in Indonesia's favor (see table). Lu said economic cooperation could still be stepped because the economies of the two countries are complementary. Data show that China's exports to Indonesia include machinery and equipment, electrical appliances, electronic goods, textiles and motorcycles, while it imports crude oil, palm oil, paper, pulp and timber from its Southeast Asian counterpart. China, with considerable experience in hybrid rice technology, has sent a number of experts to work with Indonesian companies, Lu said. "My understanding is that in some cases and after several years of experimentation, rice output could be increased from four tons per hectare to eight tons per hectare. I was told that (Indonesia's) minister of agriculture has issued a license to boost cooperation in this field," he said, adding that a number of Chinese companies producing agricultural machinery and equipment were working with firms here. "In terms of financial aid from China, we have offered a grant of 93 billion yuan ($50 million) and we are working with the Indonesian government on how to use the $400 million commercial loan which is now underway," he explained. The Indonesian government's commitment to fight terrorism and efforts to create national stability have provided assurance to Chinese businesspeople and investors in examining the country's potential. "Of course they would also like to see that the Indonesian government further improve its legal system and create a better investment climate." Other projects undertaken by the two countries include the construction of urea storage at PT Pupuk Kaltim in East Kalimantan under a build, leasing and transfer scheme, and a contract awarded by China to Indonesia in 2002 for the yearly supply of 2.5 million metric tons of liquefied natural gas to Fujian province. Meanwhile, in a separate interview with the general manager of Bank of China, which began operations in mid-April to help facilitate the fast growing trade between the two countries, Gao Jilu told the Post that, despite Indonesia's great potential market, he would prefer to develop the bank step by step. He declined to elaborate when asked about the bank's lending rate, saying only that it would take a conservative approach and that it had invested $50 million as starting capital in line with regulations from the central bank.