Ambassador Talks Up Investment, Trade With India

MARCH 15, 2015

New Delhi. Indonesia seeks to strengthen commercial ties with India under President Joko Widodo’s administration, the Indonesian ambassador to India said in an interview last week.

As the archipelago nation plans to leverage its maritime potential and draw more investment from the second most populous nation on Earth, relations must be further fostered, Ambassador Rizali W. Indrakesuma told GlobeAsia on the sideline of the Delhi Dialogue VII, an annual gathering of government officials, company executives and academics from India and Asean nations held in India’s capital of New Delhi.

“India is a country with rapid development in economy, technology. It buys many things from us,” he said. “India also has interests in expanding its economic relationship with Asean [Association of Southeast Asian Nations] countries, including Indonesia.

“We have to seek ways to boost our trade and investment from this country.” Rizali, along with a special Indonesian delegation led by Deputy Foreign Minister A.M. Fachir, promoted the nation’s new foreign policy doctrine at the two-day Delhi Dialogue VII last week, which discussed ways to boost economic ties and strengthen political connections and civil society interaction between India and Asean countries.

“Don’t forget, we have direct borders with India. India’s Andaman and Nicobar islands share a maritime border with Indonesia through the Andaman Sea,” Rizali said.

Joko’s administration seeks to leverage Indonesia’s maritime power in trade, infrastructure and security under his “maritime fulcrum” doctrine, taking advantage of the nation’s rich maritime resources and strategic location between Indian Ocean powers such as India and the Pacific powers of the United States, Australia and China.

“Once our new thoughts about the maritime potentials can be absorbed by Indian counterparts, it hopefully could lead to further cooperation, including real actions like an infrastructure development plan to improve connectivity between both countries,” Rizali said.

Meanwhile, from a commercial aspect, Indonesia, a country with an economy of $850 billion, has consistently booked trade surpluses with India, a $2 trillion economy, according to data provided by the Indonesian Trade Ministry. In 2010, Indonesia booked $9.91 billion in export revenue from India, while it spent $3.29 billion importing goods from India, resulting in a surplus of $6.62 billion for Indonesia.

Last year, Indonesia booked a trade surplus of $16.2 billion, a 5 percent decrease from 2013’s $16.99 billion.


Diversification needed “One thing we must highlight, our big surpluses were mostly contributed from our coal and palm oil sales to India,” said the ambassador, a career diplomat with the Indonesian Foreign Ministry.

India last year overtook China as Indonesia’s biggest buyer of coal. According to a report from global coal mining news portal, citing data from global coal market research firm McCloskey, Indonesian coal shipments to India in the first 11 months of 2014 stood at 79.4 million, up 11 percent from the same period in 2013.

Meanwhile, total coal shipments to China in the same period were 58.6 million tons, down more than 27 percent year-on-year. India, the world’s biggest importer of palm oil, is also the largest single importer of Indonesian palm oil.

Antara news agency earlier this month quoted Solvent Extractors Association of India (SEA) president Pravin S. Lunkad, as saying India depended on palm oil imports from Indonesia, with the country recognizing the quality of the commodity from the world’s biggest producer. “From 7.59 millions of tons in Indian palm oil imports last year, most of them were from Indonesia,” he said, as quoted by Antara.

India also imports Indonesian rubber,  hydrocarbon products, and pulp and paper. Indonesia imports refined steel products, petroleum products, telecommunication equipment, commercial vehicles, maize, oil seeds, animal feed and cotton from India.

Rizali said Indonesia hoped to diversify its exports, particularly for goods with added value. Investment still small From an investment point of view, India’s contribution to Indonesia’s foreign direct investment is dwarfed by that of its economic rival, China.

Last year, according to data from Indonesia’s Investment Coordinating Board (BKPM), total investment in the country from India stood at $37 million from 187 projects. That was a 43 percent decrease from 2013’s $65 million that Indian investors put into Indonesia, from 121 projects. By contrast, Chinese investors put  $800 million into Indonesian projects last year, a sharp jump from 2013’s $296.9 million. Data from the BKPM excluded investment in oil and gas, financial institutions, and home industries.

“Investment remains low [from India]. It’s a chance for both countries to explore further cooperation,” Rizali said. “I do believe it could grow further.”

Despite the small yet growing figure, Indian companies are no strangers to Indonesia, as a number of companies in various sectors such as infrastructure, textiles, steel, automotive, banking and consumer goods, have a strong presence in the country.

Prominent Indian companies like Tata Power, Tata Motors, Reliance, TVS, Bajaj, Godrej, SBI, Bank of India and ESSAR Group, have been operating in Indonesia for a number of years.

“The current administration [of Joko Widodo], as you know, continues to improve the investment climate, including with the implementation a one-stop investment service from the BKPM to draw investment, including from India,” Rizali said.