An official visit by Chinese Premier Li Keqiang to Indonesia began on Sunday and will run until Tuesday, and the two countries are expected to further promote pragmatic economic cooperation, experts said.
“China will support Indonesia in building regional economic corridors and upgrading its infrastructure and industrial development to make the maritime bond between the two countries even stronger,” Li wrote in a signed article entitled “Embarking on a new voyage of China-Indonesia friendly cooperation,” published on Saturday in the Jakarta Post, a leading Indonesian newspaper.
Xu Liping, a senior research fellow at the Chinese Academy of Social Sciences, told the Global Times on Sunday that Premier Li’s visit is expected to lead to a series of strategic agreements through the integration of the 21st Century Maritime Silk Road and Indonesia’s “Regional Comprehensive Economic Corridors.”
“The agreements are likely to be in areas such as industrial parks, production capacity cooperation, agriculture and maritime logistics,” Xu said.
There are likely to be discussions about the Jakarta-Bandung high-speed railway project in Indonesia, a transportation infrastructure project under the B&R framework, during the visit.
“The China Development Bank [CDB], the loan provider for the project, is likely to add more financing,” Xu noted.
In May 2017, the CDB signed a loan agreement with Indonesia-China High Speed Rail Co to provide $4.5 billion in loans.
In recent years, economic and trade ties between the two countries have seen rapid development, and China has been Indonesia’s largest trading partner for seven years in a row. In 2017, the bilateral trade volume reached $63.3 billion, up 18.3 percent on a yearly basis, data from gov.cn showed.
China-Indonesia Investment growing
China has been Indonesia’s third-largest source of investment since 2016. Last year, the investment volume from the Chinese mainland into Indonesia reached $3.4 billion, up 30.8 percent year-on-year.
Tianjin Julong Group, a major Chinese palm oil producer and distributor, entered the Indonesian market in 2006, and so far it has invested more than 10 billion yuan ($1.57 billion) in the country.
Sun Weijun, vice president of Julong Group, told the Global Times on Sunday that the company is very optimistic about the bilateral economic and trade ties, given the complementarity of the two countries’ economies.
“China imports about 6 million tons of palm oil annually, with 40 percent coming from Indonesia,” Sun said. “Indonesia’s abundant agricultural resources can find a huge market in China while China’s infrastructure experience and high-tech commodities are liked at the Indonesian market. It’s a two-way flow that brings economic benefits,” he noted.
Chinese investment in Indonesia will focus on infrastructure and production capacity cooperation, Xu said.
Leading Chinese machinery producer Sany Heavy Industry Co has participated in Indonesia’s infrastructure construction projects since 2004, helping build ports, roads and industrial parks.
It has also bought land in the country and plans to invest $30 million in a project there, according to a note Sany sent to the Global Times on Sunday.
“The market has huge potential and we plan to complete CKD and SKD production lines by 2019 to realize some local production,” said the note.