China continues to be one of the biggest economic contributors of Indonesia, pouring in more millions than the United States.
President Joko ‘Jokowi’ Widodo’s frequent trips and meetings with China’s President Xi Xinping over the last two years are paying off.
Based on the top foreign direct investors’ economic data from January to September 2016 provided by the Investment Coordinating Board (BKPM), China landed third following Singapore and Japan, respectively.
According to the BKPM data, China contributed almost US$1.6 billion, a growth of almost 300 percent compared to the same period last year. This is also significantly higher from China’s foreign direct investment for the entire 2015 at US$600 million. Pledges totaled US$6.1 billion for the past nine months.
The United States, meanwhile, clinched tenth at only US$430 million. From 2013 to January-September of 2016, the total FDI also fell by 2 percent from 8.3 percent. This seems to contradict President Barack Obama’s objective of strengthening U.S. relationship with Southeast Asia.
The bilateral ties also resulted to around 3,000 projects in 5 years. China is currently playing a huge role in electricity generation with its built power plants supplying around a quarter of Indonesia. About 1 million Chinese tourists arrived in September alone, making Indonesia’s goal of 20 million Chinese arrivals by 2019 possible.
The Red Dragon is also actively participating in improving Indonesia’s infrastructure building as part of its ‘One Road, One Belt’ policy or the Silk Road concept. Chinese investors are pouring in money on cement, steel, mining and automotive.
Indonesia can also expect more investments in the future to “help speed up Indonesia’s economic growth,” Chinese ambassador to Indonesia Xie Feng said.
However, the economic ties between two countries don’t come easy. Chinese investors have complained about the difficulty of fulfilling business-related requirements. These include the acquisition of land and workers’ permit for foreigners.
Indonesian businesspersons, on the other hand, criticized the slow realization of China Development Bank (CDB) commitment. CDB, which came to Indonesia in 2006, committed US$14.4 billion to complete 57 projects, but so far, only US$9.7 billion have been realized.
To resolve the issues, BKPM has created a ‘Chinese desk’ to ease challenges for Chinese entities setting up business in the country.
The controversy surrounding Natuna Islands also adds tension between the two countries. China has long impressed its claim in 95 percent of South China Sea, encroaching islands and waters of other Asian countries, reaching a tract of Natuna Islands.
Although Indonesia is a non-claimant in the South China Sea dispute, it asserts its sovereignty on Natuna Islands, which is rich in oil and fish, and strengthens its patrol to drive away illegal Chinese fishermen.