The Indonesia-China Business Forum on the sidelines of the 3rd Belt and Road Forum (BRF) held on Oct. 16 has resulted in a cooperation agreement with a total value of more than Rp200 trillion. There is even potential work between the two countries, reaching Rp455 trillion.
Economic cooperation between Indonesia and the People's Republic of China (PRC) has grown in the last ten years. It was triggered by the Belt and Road Initiative (BRI) program, which Chinese President Xi Jinping initiated in September 2013 at Nazarbayev University, Kazakhstan.
China's BRI is a multifaceted economic, diplomatic, and geopolitical endeavor formerly called the New Silk Road and later transformed into One Belt One Road (OBOR).
China's BRI is one of the Chinese government's most ambitious foreign and economic policies. It aims to strengthen Beijing's economic influence through a wide-ranging and comprehensive infrastructure development program across the countries along the routes.
BRI has two details: the land-based economic Silk Road and the sea-based maritime Silk Road. BRI connects Asia, Africa, Oceania, and Europe with various infrastructure projects. Some of the major projects of the BRI include railroads from China to Europe and railroads that cut through Southeast Asia (Vietnam, Laos, Cambodia, Thailand) to India. Several African, Asian, and Latin American countries also received support for infrastructure development, such as power plants, ports, and highways.
President Xi Jinping, on several occasions, emphasized that BRI was initiated based on peace and cooperation, openness and inclusiveness, mutual learning, and mutual benefit. The strengthening of cooperation between Indonesia and China came to the fore when Indonesian President Joko Widodo, together with First Lady Iriana Joko Widodo and a number of ministers and government officials, visited China to attend the 3rd Belt and Road Forum (BRF) in Beijing, China.
China's role in supporting the Indonesian economy has been significant in recent years. Indonesian President Joko Widodo (Jokowi), while attending the Indonesia-China Business Forum in Beijing, China, on Monday, 16 October, expressed his appreciation for the investment and contribution of Chinese entrepreneurs in Indonesia's development, especially in the last ten years.
"I would like to express my gratitude for the investment and its contribution to the development of Indonesia. In 2013, China was in the 12th place in the Foreign Direct Investment (FDI) contributor standings in Indonesia," President Jokowi said.
According to President Jokowi, the way entrepreneurs invest in Indonesia is fast and precise, and he analogizes it to the Mandarin action actor Bruce Lee with his Wing Chun movement. He believes that China's investment in Indonesia will continue to increase and become the top FDI contributor in the next one to two years.
President Jokowi's confidence is based on the fact that Indonesia currently focuses on downstream industries for various commodities such as nickel, copper, tin, and other minerals. Indonesia also focuses on building an integrated electric vehicle ecosystem to become essential to the world supply chain.
Infrastructure development in Indonesia is also crucial in the Indonesia-China mutually beneficial cooperation relationship. Indonesia continues to work on basic infrastructure, strategic infrastructure, and rural areas.
In the BRF 2023 forum, the governments of Indonesia and China agreed to increase cooperation in the Belt and Road Initiative in the future. This cooperation is expected to benefit the two countries in terms of economic, social, and political aspects.
When delivering his remarks at BRF 2023, President Joko Widodo expressed his hope that Indonesia-China cooperation related to BRI would not be politicized and should be based on the principle of equal and mutually beneficial partnership. The use of a transparent funding system, the absorption of local labor, and the utilization of domestic products are essential aspects of the sustainability of BRI projects.
“This cooperation must be ensured for the long run to strengthen partner countries' economic foundation. Not just complicate their fiscal conditions,” said President Jokowi on Thursday, Oct. 19, 2023.
Based on Statistics Indonesia records, Indonesia's exports to China for non-oil and gas commodities rose 9.36% in August 2023, from US$4.92 billion to US$5.38 billion last month. The increase in exports of major goods supplied to China in August 2023 was driven by animal or vegetable fats and oils, iron and steel commodities, and mineral fuels. The government is also encouraging China to open more quotas for agricultural and fishery products from the country.
The China Investment
Moreover, the Indonesian delegation also specifically conveyed the development of the strategic project of the Nusantara Capital City (IKN) in East Kalimantan. In a number of forums in Beijing, it was mentioned that the IKN is implementing the green city concept in a jungle, sixty percent of which is forest, the first carbon-neutral city in Indonesia. Indonesia can at least cooperate with China regarding technology transfer for the green city and smart city concepts and the development of the electric vehicle industry and green energy.
President Jokowi said that the construction of basic infrastructure and the center of government in IKN is expected to be completed next year. As of early November 2023, at least 21 domestic and foreign investors are ready to conduct groundbreaking with a total investment value of US$2 billion.
On the same occasion, SOE Minister Erick Thohir said the Indonesia-China Business Forum produced 31 business cooperation agreements reaching at least Rp200 trillion. Even so, there is still potential for cooperation of up to Rp455 trillion with China. The agreement covers various fields, including infrastructure, energy, manufacturing, and tourism.
"The investment growth from China to Indonesia, if we look at it from 2013, is more or less at US$280 million, but currently it has reached US$8.6 billion. It means it is significant," the Minister explained.
Chinese investment in Indonesia continues to increase every year. The investment has encouraged the development of industries and special economic zones in the country. In the first semester of 2023, Chinese investment in Indonesia has reached more than US$3.8 billion. Therefore, this BRI cooperation will continue to encourage the development of industries and economic zones, especially in North Sumatra, North Kalimantan, Sulawesi, and Bali.
Writer: Kristantyo Wisnubroto
Editors: Ratna Nuraini/Elvira Inda Sari/Erik Limantara
Translator: Aisah Amanda
