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"Indonesia plans to increase trade with Russia to $ 5 billion"
On trade cooperation and investment prospects between countries, the analytical agency East Russia told the head of the Committee on Russia and the CIS countries of the Chamber of Commerce and Industry of the Republic of Indonesia Didit Ratam
- You came to the Forum as a representative of the Chamber of Commerce of Indonesia. When the Chamber of Commerce and Industry of Indonesia was founded? Please describe the structure of this organization.
- Yes, I represent the interests of the Indonesian Chamber of Commerce and Industry in Russia. The current management of the Indonesian Chamber of Commerce and Industry (as we call it - KADIN) was elected 5 years ago for the period from 2015 to 2020. In 2015, KADIN was headed by the current General Chairman. This is a huge structure. CADIN consists of 11 business councils and committees for bilateral relations, for example, in the field of media, information technology, energy, etc. The Chamber unites about 500 provincial, regional and municipal CCIs in Indonesia.
- Was the first Russian-Indonesian Forum in Vladivostok organized with the support of the Indonesian Chamber of Commerce and Industry?
- No, the Forum was organized with the participation of one of the regional branches of the Indonesian CCI. We are a nationwide organization representing business interests in 34 Indonesian provinces. Nevertheless, after my return to Jakarta after this visit, we intend to organize a joint meeting of all regional offices of the CCI to determine the potential for cooperation with Russia.
- How can you comment on the current level of relations between Moscow and Jakarta? Does the CCI have any plans to organize the second Forum? Does the Indonesian Chamber of Commerce and Industry have a representative office in Moscow?
- The CCI does not have an office in Russia, all representatives of the Indonesian CCI are located in Indonesia. The Indonesian Chamber of Commerce and Industry is a very large national organization with many designated committees responsible for promoting cooperation in trade and industry in certain regions. There are committees for interaction with the countries of the Asian region, European countries, countries of the African continent, etc.
I am an authorized representative of the Chamber of Commerce and Industry of Indonesia in Russia, doing something similar to the ambassadorial functions, and I can state with confidence that the Chamber of Commerce and Industry of Indonesia has developed close partnership relations with the governmental and business structures of Russia.
- How can you characterize the relations of the Indonesian Chamber of Commerce and Industry with the Russian Chamber of Commerce and Industry?
- We have developed close partnerships with the Russian Chamber of Commerce and Industry and the Russian Embassy in Indonesia. We regularly organize meetings to exchange views on issues of potential interaction, and also provide representatives of government and business structures of the Russian Federation with any necessary assistance and support.
Let me note the fact that the main function of KADIN is to increase the efficiency of mechanisms for mutually beneficial investment projects and accelerate the implementation of investment interaction with other countries in order to significantly increase mutual investment. The dynamics of trade relations with Russia may change - at some period of time Indonesia supplies more goods to Russia or vice versa, but this does not speak of competition, but of complementarity and mutually beneficial balance of trade relations between our countries. Russia exports energy raw materials to Indonesia, which is necessary for the development of our state. In turn, Indonesia supplies machinery and electronics to Russia. The main task of KADIN is to establish mutually beneficial cooperation between our countries.
- Regarding the trade turnover between Russia and Indonesia, could you provide information on the structure and volumes of exports and imports?
- In the structure of imports of Indonesia, energy raw materials prevail - oil and oil products, as well as food products, especially wheat. Nevertheless, we are aware of Russia's potential in terms of increasing the share of high-tech exports, including products of the military-industrial complex, software, products of the engineering industry, etc. Regarding the import of Indonesian goods to Russia, we traditionally focus on food and agricultural products, as well as on engineering products, textiles, etc. Currently, Indonesia is home to 260 million people and the population continues to grow. We need basic food crops such as rice and wheat from which we can make flour for Indonesia's popular noodles. This year we are seeing a significant increase in wheat exports from Russia. Among other things, we need meat, we are focused on increasing imports of livestock products, especially dairy cows and cattle. Currently, we import about 1 million head of cattle. We are interested in the development of livestock farms in Russia, since the climate and territory allow you to successfully develop this industry. We also have vast territories, but unfortunately not suitable for raising cattle. An important role in the implementation of these plans is assigned to joint Russian-Indonesian enterprises. We are interested in the development of joint ventures, which will bring undeniable benefits to our states. Currently, our trading partners are traditionally Australia, New Zealand, India, China, etc. However, we are focused on diversifying foreign trade relations, looking for new partners and increasing the efficiency of foreign economic relations. The priority task for our country is the provision of energy resources. Over the past twenty years, oil production in our country has been steadily falling, so the Indonesian government would like to promote new infrastructure projects aimed at increasing the potential for electricity generation, for which we need to increase the volume of imports of oil and natural gas.
- You mentioned the fact that Indonesian companies are ready to invest in the development of joint ventures with Russian partners. Could you give examples or name similar companies?
- It seems to me that at this stage it is too early to name any specific enterprises or companies. One can only note a general tendency towards increased interest in the development of joint Russian-Indonesian enterprises.
- In turn, we can give several examples of effective investment in the Russian economy: an Australian company that invests in coal mining in Chukotka, an Indian company that is developing the coal mining industry in Kamchatka, a Vietnamese company that produces milk in the Primorsky region.
- Your example of a company investing in the development of the dairy industry is very interesting. Dairy imports to Indonesia will continue to grow. We need to develop the dairy processing industry and, as a result, increase the import of raw materials. Nowadays in Indonesia, fresh milk is usually blended with imported milk powder to make dairy products. In addition, as I mentioned earlier, we are in dire need of energy imports.
- How could you characterize the turnover of trade relations between Russia and Indonesia? Could you provide specific indicators or figures?
- This is a good question, but in this case, the indicators will differ. According to the Russian government's estimates, the total trade between Russia and Indonesia amounted to USD 2,6 billion. However, according to the estimates of the Indonesian side, the volume of the total trade turnover is US $ 2,1 billion. The difference can be explained by the fact that Russia only takes into account the country of origin of the goods, regardless of the supplier country, for example, if the goods are shipped through intermediary countries such as Singapore or Hong Kong. However, Indonesia only takes into account direct deliveries between the two countries.
- How do you assess Indonesia in the top ten countries of the Asia-Pacific region in terms of plans to increase trade with Russia? For example, Vietnam plans to increase its trade turnover to $ 10 billion in the near future.
- Indonesia plans to increase trade with Russia to $ 5 billion.
- Over what period of time does Indonesia plan to achieve a similar volume of trade with Russia?
- Indonesia is very actively building up its trade partnership with Russia, an example of this is the increase in total trade turnover by 50% during the last half of 2016. We look forward to becoming one of Russia's key trading partners in Southeast Asia, but a lot of effort is needed to achieve this goal.
- What was the reason for such a low trade turnover with Russia in the past? Indonesia bought goods in China, the country did not look north?
- Most of the supplies from Russia to Indonesia are for military-industrial complex products, mineral fertilizers and wheat. The structure of Indonesia's exports to Russia is traditionally dominated by equipment and mechanical devices, as well as high-quality palm oil. Nevertheless, we need to bilaterally increase the level of awareness of trade opportunities between our countries, since, unfortunately, neither Russia nor Indonesia fully understands the opportunities that can be provided to our states through mutually beneficial trade cooperation. In this regard, an important area is the expansion of the export of high-tech goods from Russia to Indonesia, as well as the development of initiatives aimed at increasing the recognition of non-primary goods in Russia. In this regard, it is necessary to note high-tech products, software, machines, apparatus, equipment, products of the military-industrial complex, as well as means that promote the use of energy for peaceful purposes.
- To what extent is the Indonesian government interested in attracting Russian investors for a more active participation in the development of the country's economy, or is it mainly about technology transfer?
- Of course, we are not talking about pure technology transfer. The time will come very soon when Russian companies will take a significant share in the structure of production in Indonesia. However, for this it is necessary to create favorable conditions in terms of the legal framework. Russian companies in Indonesia will have to face the need to localize certain production components, for example, when it comes to the production of defense products, aircraft engines, machinery or equipment. The Indonesian government acts to ensure the country's national security as well as to develop local industries. Russian companies, one way or another, will have to face the need to provide service, repair, etc. I would like to emphasize once again that we are maximally focused on mutually beneficial trade and technological cooperation.
- How can you comment on the possibilities of developing cooperation in the fishing industry? Are there agreements at any level?
- Joint projects for the development of the fishery infrastructure of our states are still at the initial stage of development and the total investment currently does not exceed US $ 10 million. Nevertheless, the Indonesian government is interested in developing joint projects with Russia in the fishing industry. Fishing, marine fishing and fish farming are traditional industries in Indonesia. However, we understand what rich experience Russia has in this industry, we realize that we can learn a lot from Russian partners, therefore we are maximally interested in developing partnerships in this industry.
- Do you have any plans to reach agreements in the near future? Will there be any agreements signed?
- Behind the signing of any agreement is a long process of discussion and approval. It is necessary to take into account many factors, develop a concept, submit it for consideration to the appropriate structures, get the support of responsible government bodies, etc. Any country, not only Russia and Indonesia, faces similar difficulties. There are certain normative legal acts that regulate the requirements for certain types of activities, which may limit our opportunities for the development of certain types of joint activities. The process of establishing mutually beneficial cooperation is not proceeding as rapidly as we would often like. It is necessary to prepare an appropriate regulatory framework, infrastructure of the system for regulating legal and economic relations, as well as develop a concept of regulatory support for trade and industrial cooperation between our states. We are still at the beginning of this path, but, nevertheless, we are actively moving forward.
- In Russia there is an organization called the Agency for Attracting Investments and Export Support, one of the development institutions of the Far East. The Agency's tasks are to create a database on investment projects in this region, to attract new investors to the Far Eastern Federal District, as well as to support and support investment projects. Are you interested in cooperation with this structure?
- I think this is a wonderful and very necessary initiative. I consider very sound idea of the organization and development of territories of advanced social and economic development in (TOP). However, it is obvious that the state can not make decisions on the need for the development of a particular business - business should be given more independence in making decisions in accordance with its interests.