RI, China seal economic and defense deals

Primastuti Handayani, The Jakarta Post, Beijing

President Susilo Bambang Yudhoyono and Chinese President Hu Jintao witnessed the signing of five agreements on the economy, tsunami assistance projects, defense technology and education at the Great Hall of the People in Beijing on Thursday afternoon.

The signing marked a significant improvement in relations between the two countries.

The agreements follow up on an earlier deal signed in Jakarta to boost trade and investment between the countries.

In his opening remarks at the signing ceremony, Susilo expressed gratitude for China's understanding of his having to delay his visit from July 13 because of fuel shortages at home.

Earlier in the day, Susilo met with Chinese Premier Wen Jiabao and the two leaders discussed efforts to strengthen bilateral ties.

Presidential spokesman Dino P. Djalal told the press that Jakarta and Beijing had agreed to set up an investment promotion center to increase two-way investment between the countries.

China also signed deals with Indonesia on four infrastructure projects: the construction of the Tuban refinery in East Java, the development of a 158-kilometer railway line connecting Cirebon in West Java and Kroya in Central Java, the construction of a power plant and the development of the Jatigede dam in West Java.

The Tuban refinery, to be build by state oil and gas company Pertamina in cooperation with China Petroleum & Chemical Corp., would be Indonesia's 10th refinery.

Indonesia currently has nine small and large refineries with a total processing capacity of close to one million barrels per day (bpd) of crude oil.

The construction of the Tuban refinery is expected to begin next year at the latest. When it is completed, the refinery will have a processing capacity of between 150,000 bpd and 200,000 bpd.

On the trade front, Dino said Jakarta and Beijing wanted to see two-way trade rise to US$30 billion by 2010, from $13 billion in 2004 and $10.2 billion in 2003.

Indonesia's trade with China could soon surpass its trade with the United States, which reached $13.5 billion in 2003.

Chinese exports to Indonesia include electrical machinery and equipment, electronics goods and home appliances, textiles and motorcycles. China's principal imports from Indonesia are mainly natural resources and resource-intensive goods like crude oil, natural gas, palm oil, paper, pulp and timber.

Dino said China would also assist Indonesia by providing a seismograph center to detect earthquakes and tsunamis.

This agreement follows the deadly tsunami that hit Nanggroe Aceh Darussalam on Dec. 26, killing about 220,000 people and causing trillions of rupiah in damage.

In return, Dino said, Susilo offered China the opportunity to develop a commuter railway system in the Aceh capital Banda Aceh.

Agreements signed by RI and China:

1. Memorandum of Understanding on Research and Development in Defense Technology Cooperation between China's Commission of Science, Technology and Industry for National Defense and Indonesia's Office of the State Minister for Research and Technology.
2. Memorandum of Cooperation between China's Ministry of Civil Affairs and the Aceh and Nias Rehabilitation and Reconstruction Agency on reconstruction projects in tsunami-affected areas, funded by Chinese non-governmental donations.
3. Agreement of Grant Assistance in Relation to Economic and Technical Cooperation between the governments of China and Indonesia.
4. General Loan Agreement of $100 million of Preferential Buyer's Credit from China to Indonesia.
5. Arrangement between China and Indonesia concerning Chinese language instruction.