Preface
Indonesia-China
relations began in the 50s, when political policies of President Sukarno was
more inclined to the axis Moscow-Beijing-Jakarta. This policy is taken by
Sukarno to offset the Allied forces in Southeast Asia that much pressure
against the territorial integrity of Indonesia at the time. However, the
relationship is much more to the political and military ties in the face of a
state of cold war ongoing. The relationship did not last long, since the fall
of Sukarno and the banning of the Communist Party of conduct all its activities
in Indonesia by Suharto regime, and it had cut off relations with the Chinese
government for at least 30 years. Return to normal relations between the two
countries since the resumption of diplomatic relations in 1990.
The history
both political and economic ties between China and South East Asia region is
actually long overdue, especially with kingdoms in Indonesia. Great kingdoms in
Java-Sumatra to eastern kingdoms in Indonesia had long been doing trade with
kingdoms in China. Indonesia had long been one of the important
trading partners for China, both as a raw material producing areas as well as
the market for the products of the ruling dynasties in China. Before the entry
of Europe to Asia, on the coast of the island of Java there were many colonies
of Chinese society, Arab and Indian who had been trade with the local community.
These colonies have contributed immensely to the progress of work in the trade
between the archipelago and many affect the spread of culture and religion.
After the
entry of Europe, trade relations between China and Southeast Asia began to fade
because of the monopoly by Europeans to produce Southeast Asia. However, the role
of the colonies Chinese people living in Southeast Asia was not faded. Many of
them become middle men between the local authorities with the European people
as crops collectors. In addition, many ethnic Chinese who become mercenaries
for VOC and EIC and also provide workers brought in from the mainland to the
needs of the European plantations in south East Asia. Until now, the role of
Chinese descent communities that widely spread in Southeast Asia is still very
important to the economic activities of ASEAN countries. Because many of the
citizens of this descent who is a businessman and also sometimes have a
business relationship with the businessmen in mainland China.
Relations
among ethnic Chinese business going is owned historical ties through family
attachment and very strong clan owned by Chinese people both overseas and in
mainland China. Pattern of relationships which are very complex and sometimes
that is the secret backers and boosters for the efforts made by the Chinese
people overseas. The success of their efforts will certainly impact the
well-being of families and their business groups who are in mainland China.
China Economies
China's rapid
economic progress began after the death of Chairman Mao who became patron
conservative Communist of China. The Policies of The big leap forward was
initiated by Mao Zedong had given failed to the economic downturn. Since
Deng Xioping ruling, the People Republic of China launched a program of
"modernization four" which is an effort to post-Mao PRC leaders among
others to overcome domestic constraints, namely the modernization of
agriculture, industry, science and technology and the military. Economic
development a top priority, given the economic weakness is the fundamental
source of national vulnerability. Deng Xiaoping also allow private ownership of
land and means of production to the farmers in the villages in 1978[1].
This policy of course excludes those conservatives in the Chinese Communist
Party does not see the permissibly of private ownership by residents. In
1980, the PRC also opened up its economy by creating a special economic zone in
the city of Shen Zen and the building industry, shipbuilding and manufacturing.
China's peak economic policy liberal happens when 2001 officially joined the WTO
in 2005 and China to allow yuan currency traded against the U.S. dollar.
The large
number of productive population PRC also is an absolute advantage for China to
promote the progress of manufacturing industry with a low cost. The large
number of workers available in the villages to be one of the main resources of
China's economic development in the early 90's. Until now, the PRC is still a
provider of low-cost labor countries in the world.
Picture 1, People's Republic of China GDP Growth
Table 1, China Population Demography 2012 by age
The Effect of China Economic on ASEAN and Indonesia
China is a
large economy must also be supported by the economy of neighboring countries,
especially ASEAN region, due to the ASEAN region has long been a gateway to the
world market of China products. In addition, ASEAN is a market that consumes a
lot of products from China. Based on ASEAN trade data, the People Republic of China
have took place the first ranks for country of origin of imported product to
the ASEAN nation. As for the export destination, Japan still ranks first for
ASEAN country products. Along with the increase in economy, China's
share of ASEAN trade had reached 11.7% during the year 2011. Possibility in the
future, China will become a net importer of increasingly aggressive raw
materials, and replace Japan as the country importer of raw materials and
energy from ASEAN.
Table 2, Asean Trade by Selected Partner Country 2011
(million of USD)
China Investment in Indonesia
Table 3, China Investment in Indonesia by Sector (million USD)
Increase the
growth and stability of Chinese economy also pushed the need for energy
resources and other mined materials as inputs for their industry. Both coal
mining companies, oil and gas belongs to China will be more spread out looking
for locations in rich countries supplying energy resources. For Indonesia,
there are a lot of Chinese companies’ direct investments took place in the
mining sector, followed by manufacturing sector. Chart 1 show that China
investment in the Indonesian mining sector since 2011 is increasing from 150
million USD in 2011 to 284 million USD in 2012. While in the first quarter of
2013, China's investment in this sector rose by 46 million USD from 2012 1st
quarter.
Chinese
investment in Indonesia's manufacturing sector has also increased, especially
since the Chinese government made a policy to cover the cement and steel
industries, totaling 2000 companies, which assessed requires enormous energy,
does not meet safety standards and are not environmentally friendly. This
policy makes the industrialists in China to be constrained in expanding in the
country. So one solution is to invest outside of China, and Indonesia becomes a
very attractive option[2].
In addition to having a lot of resources to the needs of mining and mineral
processing industry energy. Indonesia became interesting because in addition to
having a lot of raw material is needed for the processing industry, as well as
the Indonesian government's target to increase the mineral processing industry sector
investment. Beside that there is a policy prohibiting export of certain
minerals by Indonesia government. So that the inflow of Chinese investment in
mining and mineral processing course in favor of Indonesia and China. For
example in the news from the media, China intends to invest USD 1.6 Millar
mineral sector in collaboration with the government-owned SOEs[3].
There are also plans to build a smelter in eastern Indonesia by Chinese
companies whose cooperation is planned to be signed in October 2013.
Indonesia-China Trade Relation
Table 4, Indonesia Export Value by Country of Destination (thousands of USD)
Table 5, Indonesian Non Oil & Gas Export by Country of Destination
(Thousand of USD)
China became
the second largest country after the Japanese trade with Indonesia. And the
possibility of an increased demand by China and the opening of free trade between
ASEAN and China will further boost economic cooperation between the two
countries. Based on trade data from Bank Indonesia, Indonesia's exports to
China significantly from year to year, despite the drop in 2012, the volume of
Indonesia's exports to China remain large compared to the USA, and Singapore.
In addition to Indonesian manufacturing products, China become the main destination for
the market. Compared to Japan and the USA, from table 4, 5 and 6 we
see that Japan is a major importer of oil and gas products, while China is an
importer of manufactured products from Indonesia. But now Indonesia is no
longer one of the oil producing countries, so that the role of China as a
destination for exports of non-oil and gas will be increasingly important for
Indonesia. Indonesia hopes that the economic cooperation between the two
countries would make China more valuable for Indonesian products. If we look at these
data, it is obvious that Indonesia's main export markets are in Asia and USA. But
with the slow recovery of the U.S. economy, and strengthening the economy ASIA,
ASIA Indonesia hopes the market can absorb more products from Indonesia. So the
trading cooperation between ASEAN-China and also possibility of India will give
beneficial impact for the economy of
ASEAN countries especially Indonesian.
Table 6, Indonesian Export on Oil & Gas by Country of Destination
Indonesian
trade data shows that Indonesia imported goods came from Singapore and then
followed by China (table 7). but in the year 2012, Indonesia imported then
shifted to China, with the volume of Indonesia's imports amounted to 29.4
billion USD. But so, many products in Singapore are imported directly from
China and then marketed to Indonesia. So that Chinese products are marketed in
Indonesia can directly or through Singapore to Indonesia.
In a meeting
between Indonesia and China, that held at Jogjakarta "the 10th session of
China-Indonesia Joint Committee on Economy and Trade" there are great
expectations regarding economic cooperation between Indonesia and China and the
ASEAN-China cooperation agreement in which China's trade minister expressed
both trade and economic cooperation countries will greatly benefit. The bilateral
cooperation between Indonesia-China will provide increased investment of
Chinese companies in Indonesia. China's trade minister Chen Deming, pledged to
support funding for strengthening the infrastructure sector, especially in the
field of communication and energy and hope Indonesia can also provide support
and comfort for Chinese investors in Indonesia. Whereas Indonesian Trade
Minister Mari Elka Pangestu said Indonesia intends to deepen bilateral
relations of countries, increasing trade and investment between the two
countries in various sectors. Mari Elka says it will open up opportunities for
investors to tap into China's manufacturing sector and infrastructure
construction in Indonesia[4].
Table 7, Indonesia Value of Import by Country of Origin
(Thousand of USD)
Chinese
ambassador to Indonesia also stated that China intends to increase their
investment in Indonesia to support the increased investment. China also intends
to enter the infrastructure sector such as roads, communication and energy. This
was stated by Liu Jianchao that to increase Chinese investment in Indonesia, then
the government should build the infrastructure so as to provide for increased
economic cooperation[5].
This of course implies that the Chinese government intends to give assistance
in the construction of infrastructure that can support Chinese investment in
Indonesia. While Indonesia is also seen that China can be a main export of
Indonesian products in the future and Indonesia also saw that potential Chinese
investors will be even greater in Indonesia in various sectors. This of course
implies that the Chinese government intends to provide assistance in the
development of infrastructure that can support Chinese investment in Indonesia.
While Indonesia is also seen that China can be a main export of Indonesian
products in the future and Indonesia also saw that potential Chinese investors
will be even greater in Indonesia in various sectors.
Although the intention of China to support infrastructure
development in Indonesia, but China has not become one of the creditors for
Indonesia. As usual infrastructure development by the government is usually
funded by foreign aid, both bilateral and multilateral. Based on data from the
loan Indonesia, Japan, France and Germany is still the largest creditor nation
to Indonesia (table 8). In addition, the government is still relying on
multilateral financial institutions as a source of loans to fund infrastructure
programs in Indonesia.
Table 8, Indonesia Bilateral Loan by Country
(Million of USD)
Table 9, Indonesia Multilateral Loans by International Financial Organization
(millions of USD)
Closing
China be the most important countries for Indonesia, and the probability of the government regime changed next year would be improve bilateral relation two countries is mainly in the economy.
China be the most important countries for Indonesia, and the probability of the government regime changed next year would be improve bilateral relation two countries is mainly in the economy.
[2] http://www.shnews.co/detile-19244-china-agresif-investasi-sektor-energi-di-indonesia.html
[3] http://bisnis.news.viva.co.id/news/read/421392-china-akan-investasi-miliaran-dolar-di-industri-mineral
[4] http://english.people.com.cn/90001/90776/90883/6940099.html
[5] http://www.antaranews.com/berita/365956/kerjasama-ekonomi-indonesia-china-akan-fokus-pembangunan-infrastruktur
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