Although China plans to invest $ 18.4 billion in Indonesia over the past five years, investment n ' was not as important as its commercial activities with the archipelago.
"Ours has become one of the most dynamic bilateral relations and the most influential in the Asia-Pacific region," said Chinese President Xi Jinping to The Jakarta globe in November. Indeed, the two economies have benefited from increased trade and investment with each other in the past decade, and it is likely the connection will strengthen in the coming years.
Indonesia should be the seventh largest economy in the world by 2030, according to the global consulting firm McKinsey & Co. management at that time, China will become the largest. It is true, the two nations are riding a mutually beneficial business relationship that has been running for about 64 years.
as the Chinese New year is upon us, Indonesia Expat takes the opportunity to highlight three main to know between China and Indonesia.
There is a growing trade imbalance China's favor
During the last decade, China has become the largest trading partner Indonesia in Asia, surpassing Japan, Singapore and South Korea. In the same period, China has managed to turn the tables on its trade deficit. In 2003, China imported a of goods from Indonesia US $ 3.8 billion. Moreover, Indonesia has imported only US $ 2.96 billion from China. The same year, China recorded a deficit of $ 0.84 billion trade. Fast forward to 2013, Indonesia exported goods worth $ 22.60 billion to China but imported a huge US $ 29.85 million. This means that China has enjoyed $ 7.25 billion of commercial profit this year. Although the 2014 figures are not yet there is increasing concern that the trade imbalance will increase.
This is also reflected in the nature of Chinese investment in Indonesia, which have increasingly focused on the energy sector of the archipelago, according to McKinsey. Growth in this sector also requires Indonesia to import more machinery and equipment from China. This is one area where the imbalance continues to grow, as the number of employees in the area of energy in Indonesia are surpassed by the number of jobs generated in the manufacturing sector of China.
Jusuf Winandi courtesy of APEC 2013
Indonesia wants China to invest more in local infrastructur
Under the new leadership of President Jokowi, Indonesia seeks to increase annual economic growth to 7 percent. To achieve this, the nation requires investment by 2020 for infrastructure projects approximately worth $ 740 billion. Jokowi is not shy about his message.
"We are waiting for you to invest in Indonesia," said Jokowi to country leaders at the APEC Summit 2014 in Beijing late last year. The day before he held a meeting with the Chinese president, urging China to take forms "more concrete" action regarding strategic partnerships with Indonesia.
China-countries with the largest foreign reserves in the world, with as much as US $ 2.4 trillion-a access to funds that Indonesia needs. on January 27, the two countries pledged greater cooperation in areas such as trade, investment and infrastructure . Under the agreement, China will help Indonesia build factories and production lines in various sectors. This, in turn, can also help promote manufacturing space of Indonesia in the world.
over the past five years, Chinese investment in Indonesia have not been considered as important as its trading activities. Although China had planned to invest $ 18.4 billion in Indonesia over the past five years, only US $ 1.6 billion (about 8 percent) of it has actually materialized, creating a mere 40,700 jobs in the nation. China is 13 e position regarding the direct investment made in Indonesia in the last half-decade. In contrast, Singapore, which is in first position, has invested about US $ 26 billion in Indonesia since 2010.
Jusuf Wanandi, vice president of the board of the Center for Strategic and International Studies ( CSIS) Foundation, said mistrust hampers business between Indonesia and China. "We have such a historical burden to carry in our relationship. […] To be honest, it's because they do not trust us, "said Wanandi in a discussion of the Indonesia-China relations last month.
Indosat M2 Huawei Ikhlasul by Amal (CC)
giants of China's technology are hovering au above Jakarta
Indonesia is a market very promising technology. The country should have more than 100 million smartphone users in 2018, a considerable increase of its 38.3 million users today. There are about 72.7 million active Internet users in the nation, and that is still only Internet penetration less than 30 percent.
Not wanting to pass up this opportunity, a number of Chinese high-tech companies have extended their reach to Indonesia. In February 2013, technology and investment media of China's giant Tencent announced a joint venture with one of the largest media conglomerates in Indonesia, MNC, to push the app WeChat messaging domestic growth. Shortly after, the Chinese Web browser Baidu came in Indonesia with a suite of web and mobile applications. payment gateway Alibaba's Alipay, AliExpress international market, and the mobile Web browser UC also taken strong and decisive action in Indonesia.
Huawei, Oppo and Xiaomi are only a few Chinese equipment players hoping to capitalize on the growth of Indonesia and rich technology consumers of the middle class. Huawei plays a big role in the telecommunications infrastructure sector in Indonesia, where it now employs thousands of local workers. Oppo claims to have used more than 3,000 Indonesians and plans to develop a smartphone factory in Tangerang city this year. Fellow comrades as Chinese consumer electronics firm Haier and ZTE telecommunications equipment company would also have the intention to open in Indonesia smartphones plants.
China will continue to be a very important partner in the economic development of Indonesia in the coming decades. The greatest nation seems to have the upper hand when it comes to partnerships, and the development of Indonesia is expected to be to balance the trade deficit.