Thu, 03 Jul 2003

Sukhoi hullabaloo to impede trade with Russia

The Jakarta Post, Jakarta

The melee between the House of Representatives and the government over the purchase of Russian Sukhoi jet fighters and copters could hamper efforts by local businesspeople to establish trade networks with the frontier market of Russia.

Secretary-general of the Indonesian Footwear Association, Djimanto, told The Jakarta Post on Wednesday the polemic might nullify the chance of Indonesian exporters to expand their market to Russia.

"We are at risk of losing our best vehicle for establishing a trade network with Russian businesspeople due to all this quarreling," he said.

He said Russia, with a population of about 150 million, was a potential new export market for Indonesian goods.

Currently, however, to reach the Russian market the exported goods are handled by third parties in India, China and European countries.

Djimanto said the reason for the use of third parties was the lack of reliable payment systems and company information in Russia.

Thus, he said, the only feasible way to learn about the market conditions in Russia and its companies was through government- initiated countertrade deals like the one involving the Russian aircraft and several Indonesian commodities.

Under the deal, worth about US$192 million, Russia will receive some 30 commodities and manufacturing products from Indonesia in exchange for the military equipment.

The commodities include crude palm oil (CPO), textiles, footwear, coffee, rubber, cocoa, black pepper, electrical appliances and fishery products.

The deal was signed by the Indonesian and Russian governments during President Megawati Soekarnoputri's visit to Russia in April.

However, the House has charged that the purchase of the aircraft did not follow normal procedures, as it was supervised by the Ministry of Industry and Trade and the State Logistics Agency (Bulog), not the Ministry of Defense.

Minister of Industry and Trade Rini M.S. Soewandi has said there were no irregularities in the deal.

She said the purchase was based on the country's immediate need for military equipment, and that the President had given her the mandate to settle the deal.

The minister also said the deal was timely in that the country was in dire need of boosting its exports by opening new markets such as Russia.

"By creating a new market, we hope it will help increase our exports and create new jobs," said Rini on Wednesday.

Meanwhile, the chairman of the Indonesian Employers Association, Sofjan Wanandi, said local businesspeople were worried the controversy would tarnish the image of Indonesia and discourage other countries from making similar deals.

Sofjan said both the government and the House should tread carefully because Russia could become an important export destination due to its large population and abundant oil resources.