Susilo wants closer relations with China

Susilo wants closer relations with China

Primastuti Handayani, The Jakarta Post, Beijing

President Susilo Bambang Yudhoyono says Indonesia could benefit
from forging closer ties with future superpower China.

Speaking to the Indonesian community in Beijing on Wednesday
evening at the Diaoyutai State Guest House, Susilo pointed out
that China had a gross domestic product of US$1 trillion,
compared to Indonesia's $200 billion.

"After surpassing Germany and Japan and probably the United
States, which had a GDP of $10 trillion last year, by 2050, China
is becoming a real superpower," he said.

The President said his four-day visit to China was a follow up
to Chinese President Hu Jintao's visit to Jakarta in April after
the Asian-African Summit, where the two leaders signed a
strategic partnership agreement.

Susilo said Indonesia's trade volume with China had grown
significantly over the past few years and looked to continue
rising.

"Last year, our exports to China stood at $4.6 billion while
our imports were $4.1 billion," he said.

"In the first two months of this year, our trade volume
increased by 47 percent. By 2008, we expect our trade volume with
China to rise to $20 billion."

Indonesia's $4.6 billion in exports to China in 2004 comprised
$1.17 billion in oil and gas exports and $3.44 billion in non-oil
and gas exports. Those figures were a 21 percent increase from
2003.

The country's $4.1 billion in imports from China last year
consisted of $743 million in oil and gas imports and $3.36
billion in non-oil and gas imports, a 38 percent raise from 2003.

Data from the Investment Coordinating Board shows that
bilateral trade between the two countries stood at $13 billion
last year, while Chinese investment in Indonesia amounted to $6.5
billion.

"If we can (increase trade ties), we can create more jobs back
home as well as drive the real sector and increase tax revenue,
while economic growth will also rise. Thus we can also improve
the education sector, health services and increase people's
purchasing power," Susilo said.

Indonesia's economy grew by 5.1 percent last year, with a
projection of 5.5 percent growth this year. Growth in the first
quarter of this year reached 6.4 percent.

During Susilo's visit to China, Indonesia will offer
investment opportunities in its vast energy resources,
infrastructure projects and other commodities such as palm oil
and rubber.

Indonesia has estimated reserves of nine billion barrels of
oil, 188 trillion standard cubic feet (tscf) of gas and 19.3
billion tons of coal.

However, despite the abundant reserves, Indonesia's rising
energy consumption and recent fuel shortages are cause for
concern.

"Our oil reserves will last 15 years, gas 60 years and coal
150 years, assuming there is no new exploration and
exploitation," the President said.

To address the recent fuel shortages, which forced the
President to delay his visit to China, which was originally
scheduled to begin on July 13, Susilo said that in the short term
the government was focusing on its energy conservation campaign.

"However, energy conservation is only one of the solutions,"
Susilo said.

"Saving fuel and the diversification into alternative fuels
are only 30 percent of the energy conservation scheme. We must
look for other ways to address the fuel problems," he said.

For the mid and long terms, the government will study its fuel
subsidy policy and try to devise an acceptable fuel pricing
scheme.

"When our oil output decreased to 1.1 million barrels per day
(bpd) from 1.6 million bpd during the Soeharto era, we had to
import oil when the price was at $62 per barrel. This will cause
the fuel subsidy to balloon to Rp 120 trillion, which is 30
percent of the total state budget."

Susilo also raised concern over rampant oil smuggling due to
the large disparity between domestic and global oil prices.