RI, China agree to step up economic ties

Fabiola Desy Unidjaja, The Jakarta Post, Jakarta

China and Indonesia signed several agreements on Wednesday, including one on the reopening of a branch of the Bank of China in the country in a bid to further boost economic cooperation between the two countries.

Visiting Chinese Premier Zhu Rongji and President Megawati Soekarnoputri witnessed the signing of six economic agreements at Merdeka Palace, following bilateral talks between the two delegations.

Besides the reopening of the Bank of China branch, the agreements also covered, among other things, avoidance of double taxation, cultural cooperation and agricultural cooperation.

The two governments also agreed to expand cooperation in tourism to make Indonesia one of the main tourist designations for Chinese citizens.

China also pledged some 40 million renmimbi (US$5.7 million) as a grant for infrastructure development in Indonesia, including the construction of highways and railroads in the province of Aceh.

Zhu, the first Chinese premier to visit Indonesia in the past 11 years, said at a joint press conference that Beijing fully supported the Indonesian government in resolving the various problems and challenges currently faced by the Indonesian nation and people.

"China will always support the Indonesian government's efforts to maintain its territorial integrity, sovereignty and national unity and to accelerate its economic recovery," Zhu said through an interpreter.

"We are very pleased with the remarkable achievement in Sino- Indonesian relations," he noted, adding that he had very open discussions with Megawati concerning a number of international issues which the two countries had a common interest in.

Megawati said both China and Indonesia, which have enjoyed "long and friendly" relations, would continue to strengthen bilateral cooperation in the field of economics and politics.

Indonesia resumed full diplomatic ties with China in 1990, after Jakarta suspended relations in 1967 following the abortive coup allegedly launched by the Indonesian Communist Party. The then Jakarta government accused Beijing of complicity in the coup. China had denied it.

Since the resumption of relations, bilateral trade has steadily increased with a trade surplus in Indonesia's favor. Last year trade between the two countries reached $7.5 billion, with China in deficit by $800 million, according to Chinese officials.

China imports mainly crude oil, palm oil and logs from Indonesia while exporting mainly electronic appliances and motorcycles to Indonesia.

Bilateral trade in the first quarter of this year stood at $775.7 million with China in deficit of around $50 million, according to data from the Indonesian Central Bureau of Statistics.

The premier's visit is expected to yield many benefits for the two countries, especially in the economic field as China is a vast market for Indonesian goods.

The two leaders also witnessed the signing of an agreement by the central bank governors of the two countries on the reopening of the Bank of China, which was closed in 1967.

The first branch of the bank will be in Jakarta, Bank Indonesia Governor Sjahril Sabirin said after the signing.

Separately, State Secretary/Cabinet Secretary Bambang Kesowo told journalists the two heads of government also discussed the possibility of investing in the oil and gas sectors.

"Indonesia offered the Pangguh LNG field in Irian Jaya, while China offered participation on its oil field in Guangzhou, a booming southern Chinese province.

Bambang further said the two countries also discussed ways of further boosting trade cooperation in the coming years.

Zhu, who led a big delegation comprising ministers and journalists, arrived on Wednesday morning at the Halim Perdanakusuma Airport. He was given a full military honors at the welcome ceremony at the Merdeka Palace with a 19-gun salute.

In the evening, Megawati hosted a state banquet to honor the Chinese premier and his entourage.

Zhu is slated to meet People's Consultative Assembly Speaker Amien Rais and House of Representative Speaker Akbar Tandjung on Thursday.

On Friday morning Zhu will leave for the historic Javanese city of Yogyakarta, where he will visit the world famous Buddhist temple of Borobudur before flying to the resort island of Bali.

The premier and his entourage will leave for Beijing on Sunday.