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Indonesia chooses the Far East
Indonesia intends to open its trade mission in Vladivostok and consciously focuses its business on cooperation with the Russian Far East
At a recent meeting with Indonesian Foreign Minister Retno Marsudi, Russian Foreign Minister Sergei Lavrov said that relations between our countries are reaching a level of strategic partnership. Participation in the preparation of the meeting of the ministers of Russia and Indonesia was one of the last things that the Indonesian diplomat Hiereno Hadi Praseto performed at his post in Russia. Before his return to Indonesia, the trade attaché of the Republic of Indonesia in Russia gave an interview to the Director of the Association "Center for the Promotion of Entrepreneurs" House of Indonesia ". Within the framework of cooperation with the "House of Indonesia" EastRussia publishes a material that identifies the main problems and challenges for the development of relations between Indonesia and Russia in general, as well as with the Far East in particular.
- In fact, relations between Russia and Indonesia are developing dynamically, both in the trade and in the political field. Countries strive for strategic partnership in all areas of interaction.
After the meeting of Presidents Joko Vidodo and Vladimir Putin, we are witnessing the growing rapprochement of our countries. As a result of a three-year preparatory work in 2017, a contract was signed under which Russia will export military aircraft to Indonesia. In 2018, the Indonesian government awaits President Vladimir Putin's visit to Jakarta.
At the business level, we see the development of Russian companies in Indonesia. These are, first of all, RZD, Rosneft and Black Space. There are also Russian investments in the tourism industry of Indonesia. These are the manifestations of strategic relationships.
It is important to note that the Russian Federation and the Republic of Indonesia are complimentary countries in relation to each other. This means that Russia has what Indonesia needs and, on the contrary, Indonesia has what Russia needs. First of all, Indonesia is interested in Russian arms, high technologies, products of precision and heavy engineering, as well as in cooperation in the oil industry. Russia, in turn, is aimed at importing food products from Indonesia, as well as cooperation in the spheres of wood processing, textile and light industry and fishing.
- Thus, it can be concluded that the doubts of experts are vain, since the positive dynamics is obvious?
- I think that the relations between the countries are developing well, despite the fact that there are many barriers, among which is the image of Russia in Indonesia. Due to the fact that the United States has been conducting anti-Russian propaganda for many years, including on the territory of my country, many Indonesians think that Russia is an unfriendly and even a dangerous country. On the other hand, there are already many people who took advantage of the opportunity to interact with the Russian Federation, and their good impressions from your country, from communication with Russian citizens are transferred from person to person. We also receive a lot of requests to the Indonesian diplomatic mission in Russia from Russians who want to develop their business with Indonesia.
But there is a barrier in the political sector. In the common opinion of our countries, Western states do not want Russia and Indonesia to improve relations. On the other hand, the large number of sanctions against Russia creates a time for us. For Russia, this is an opportunity to reorient more towards relations with the eastern countries than in the West. And one of the possible challenges is Indonesia, as we are one of the largest countries in the Asian region and the largest economy in Southeast Asia. Along with China and India, Indonesia is among the three countries in G20, showing growth during the global financial crisis.
Let's also recall the history of our relationship. Russia is the successor of the USSR, which had high-quality and close relations with Indonesia. In our opinion, now is the time to return to the "golden era" of our relations in all areas of interaction, including mutual investment, trade, social and cultural ties, and tourism.
- If we talk about relations between countries in 2017, what achievements do we have in the development of economic projects, and what about the trade balance?
- Compared to Russia's trade with China and Vietnam, Indonesia's successes look modest. But if we compare the indicators of our bilateral trade in dynamics, then for the last 4 year we record steady growth. It is worth noting that Indonesia exports to Russia an order of magnitude less than Russia in Indonesia.
From my point of view, reaching out to the planned volumes of intercountry trade between our countries is hampered by image barriers, of which I have already mentioned. We provide little information to each other about the opportunities that we have. Very often, Russian citizens look at Indonesia as a strange, exotic country. And Indonesia also sees Russia as a distant and unexplored state.
But there is progress. After all, there was a time when Russian citizens practically did not appear in Indonesia, and now there are quite a lot of them in our country. We must translate those agreements that have already been formed; carefully analyze the opening opportunities, and develop information exchange and form a social image at all levels - both in government, and in business, and in the social sector. Our governments are doing a lot of work to bring Russia and Indonesia closer together. We have a very great potential for cooperation.
- As we know, now Russia is focused on the development of the Far East, and for this purpose special laws "On the Free Port of Vladivostok" and "On the territories of advanced development" were adopted. Do you think these proposals are interesting to Indonesian businessmen?
- This, above all, depends on the sector. Indonesia, of course, is interested in investing in other countries. Especially in economies that are unconventional for Indonesia, for example, Africa and the Middle East. Russia is also an unconventional market for Indonesia, so our government welcomes Indonesian investments in Russia.
However, there is a problem here. This is a problem in the implementation of intentions. For successful cooperation, it is necessary to systematically communicate the information on investment opportunities to potential investors and promote the territory on a global scale.
Already today, Indonesia is considering the possibilities of cooperation with the Far East of Russia. Unfortunately, the Far East know little about the opportunities that our country provides. As you know, we are going to open our representative office in Vladivostok. This means that Indonesia is already focused on the eastern region of Russia. We have already sent a representative delegation to Vladivostok, and now we will be glad to accept a return visit with a presentation of the Far Eastern opportunities.
- Why did Indonesia decide to open an office in the Far East?
- The diplomatic corps of Indonesia in Russia, and especially the trade mission, carried out a lot of analytical work to determine the feasibility of this decision. Many consultations were carried out, and as a result, a proposal was made to open a trade office of Indonesia in Vladivostok. The Indonesian Ministry of Commerce approved this decision. In 2019, I hope the opening of the ITPC (Indonesian Trade Promotion Center) in Vladivostok will take place. Organizational issues are now being resolved.
Again, it is important to note that this is an unconventional market for Indonesia. Up to this point, being the second largest exporter in Asia, Indonesia worked primarily with Western partners, and also had close cooperation with Japan. Now, non-traditional markets for us are a challenge that we have taken to increase our capabilities.
That's why we are opening a representative office in Vladivostok. Here is a large commercial port, and this is the gateway to Russia in the Asia-Pacific Region, and the gateway to the APR for Russia.
- Last year the First Russian-Indonesian Forum was held in Vladivostok, which was supported by the Ministry of Commerce of Indonesia and diplomatic circles. This event produced any results?
- I must admit, the results are not good enough. But, at least, the parties have already held a forum at which representatives of the private Russian business sector met with the Jakarta Chamber of Commerce and Industry, with the governors of the Indonesian provinces of East Java, the head of the Investment Chamber of the district, and several Indonesian businessmen. At the last forum agreements were signed between the Chambers of Commerce, Primorsky Krai and the Far East - and this is a good start.
But there can not be such a miracle that after the first attempt everything went quickly, so the meetings should continue. To this end, we await the response of the governments of the regions of the Far East. Perhaps, it would be worth after the forum to send delegations to Indonesia to establish further cooperation. We must continue to work - we must create and agree on a program of cooperation.
Despite the absence of the program, I think that there is a certain result, because previously no one from Indonesia has ever visited the Russian Far East. This is a big step on the part of Indonesia, and now it is necessary for Russia to take counter-measures - she visited Indonesia.
- Our states already have a program of relationships. At the same time, you said that there is no "program". Do you mean that we need to envisage a separate mechanism for cooperation, or is it about developing special provisions in the existing intergovernmental program?
- It is important that the program of relations was not only intergovernmental, but for business and society. When there are only representatives of power without public organizations and investors, this is less effective. But the business sector should be protected by state structures. And to develop relationships, a subprogram of private investment within the government is needed.
- Both our countries are large, and are characterized by a complex administrative-territorial division. Certainly there are regions in Indonesia that are better suited for cooperation with Russia and vice versa?
- Yes, that is why our government is trying to develop interregional cooperation. Russia is very large, so we first established relations with the central part, and now we are moving to the regions, trying to connect them with the regions of Indonesia.
- As we know, the Indonesian city-Surabaya county is working to become either a twin city with Vladivostok or a sister region with the Primorsky Territory. Why was Primorye chosen?
- Surabaya, above all, the second largest port in Indonesia after Jakarta. This is the administrative center of the province of East Java. Vladivostok is also one of Russia's major ports, also located in the east of the country, and in this they are similar. It is important to note that Indonesia is looking for partners in the fishing sector, which is possible in Vladivostok and Primorsky Krai.
- What can you say about working with foreign investors in Russia, and, in particular, in the Far East? What is your opinion on the investment potential of the region and about the competence of the authorities?
- In general, we appreciate the work of the "Far Eastern bloc" in the Russian government, including because the federal authorities want to make the east of the country "a trading hub." This is a good program, but it's worth working with the details. In the future, it is necessary to reduce bureaucratic procedures to make it easier for investors to enter Vladivostok. Investors need infrastructure and a security guarantee for their investments.
As you know, Vladivostok is a strategic area, as it is located close to China and Japan, so we positively assess the beginnings of the Russian authorities. My proposal is that the Russian government facilitate the process of adaptation for Indonesian investors.
- How can foreign investors understand that we have really reduced the level of bureaucracy? What will serve as an indicator for determining this?
- Again we return to the need to act, we need to exchange delegations and inform each other about the changes.
- And what about the Eastern Economic Forum? Has our government no longer created a platform for such an exchange of delegations and information? Or is it not effective enough?
- The economic forum is held at a high level, and therefore there must be something else. In addition, forums alone are not enough, it is necessary for businesses to meet face to face at specific work events. Our countries have already made some progress in this direction, and it is worth noting that the b2b format works much more efficiently than government meetings.
If we sum up, the WEF is an excellent event for broad government interaction, but now the region needs to provide for private events for business and the social sphere.
I was at the East Economic Forum three times, and all the interaction there was reduced to the fact that representatives of official departments communicate with each other, and each side presents some huge projects. There are no special cases at all, only general contours.
- Let's imagine the situation that there is an Indonesian investor who wants to create a certain enterprise in Primorsky Territory, is he sufficiently informed and does he know how to start a business in Russia? And the opposite situation, do potential Russian businessmen know about the intricacies of doing business in Indonesia?
- If we are talking about Russian business opening in Indonesia, the Indonesian government will participate only in the process of facilitation (investor adaptation and primary information assistance), but it is unlikely to be a serious support.
Usually the government helps, but does not invest. That is why representatives of business should meet precisely and that is why the Russian government should take care of informing Indonesian representatives of private business, because today in Indonesian business circles there is no information about the possibilities and, moreover, the procedures in the business sphere of the Russian Far East.
The government can not influence businessmen about whether to invest them in a particular project. Businessmen need to provide only a vision of opportunities and understanding of mechanisms, then they will do everything themselves.
- What can we do to further develop cooperation between business representatives of the two countries - Russia and Indonesia?
- We need to create annual programs for the exchange of business delegations. And after certain results will appear, promote progress.
Also, more and more information should be expanded, which sectors of Indonesia may be most interesting for Russian investors and vice versa. And when there are registered models in specific business sectors, then it will go faster.
I repeat, if we look at the statistics of cooperation between Russia and Indonesia - the figures will be small. Nevertheless, there is progress, and our cooperation is moving with leaps and bounds. Both countries have resources and opportunities. We need to develop cooperation in the field of tourism and attract investment, and create additional programs for cooperation.