By Saroj Mohanty, Bandar Seri Begawan (Brunei), Oct 10 IANS | 10 months ago

India and Indonesia will launch new initiatives during Prime Minister Manmohan Singh's visit to the Southeast Asian country later this week to deepen the strategic partnership between the two countries. Manmohan Singh travels to Jakarta after attending the India-ASEAN and East Asia Summits here Thursday.


This is the prime minister's first visit to Indonesia - the world's largest Muslim nation that has a 3 percent Hindu community as well - in the bilateral context and officials say the talks between the two countries would also cover international issues.

India and Indonesia have shared two millennia of close cultural and commercial contacts. During the respective struggles for independence, the national leaderships of India and Indonesia led by Jawaharlal nehru and Sukarno collaborated closely and later laid the foundation of the Afro-Asian and Non-aligned Movement at the Bandung Conference in 1954.

Since the adoption of India's "Look East" policy in 1991, there has been rapid development of bilateral relations in political, security, defence, commercial and cultural fields. The multifaceted relationship got an added fillip with the signing of a strategic partnership in 2005 during the state visit of President Susilo Bambang Yudhoyono. Again in 2011, the two countries signed major agreements on security, trade and investment, connectivity and cultural cooperation.

Prime Minister Manmohan Singh's two-day trip Oct 10-12 is taking place at a time when the two emerging economies of India and Indonesia are going through a rough patch. Like India, Indonesia has been a whipping boy of the market for its current account deficit and reliance on external capital flows. It is running a hefty trade deficit after years of surplus. The rupiah has plunged nearly 14 percent this year, just as the rupee, which has fallen over 15 percent.

And like India, it has not developed a sufficiently sophisticated manufacturing industry capable of generating foreign exchange and large employment.

Yet, Southeast Asia' biggest economy has the best possiblity of bouncing back, CEOs of APEC economies said in a PWC survey early this month. And that perhaps explains the reasons why both Chinese President Xi JinPing and Australian Prime Minister Tony Abbot have visited Jakarta and announced more steps to beef up their economic and business ties.

The Indian government is keen to step up trade, investment especially in automobile, food, manufacturing and infrastructure sectors, and technology transfer in Indonesia.

Indian investment in Indonesia currently stood at almost USD 10 billion and was mostly in mining, textile and automotive sectors. Government and trade officials say what is weighing in Indonesia's favour are its rich natural resources and abundant young workforce.

The Indonesian Chamber of Commerce and Industry (Kadin) has welcomed India's wishes to raise investment in the country. "Indonesia still imports a lot of products because it does not have the supporting industries, which they (India) already have. With more investments coming, unemployment and poverty can be reduced in Indonesia," says Kadin chairman Suryo Bambang Sulisto.

India is looking at Indonesia as a manufacturing base for consumer goods, a service base for IT and BPO and a base for exporting to other countries.

India is also inviting Indonesian companies to invest in India. An India Business Forum (IBF) has been launched in Jakarta to boost trade and investment between India and Indonesia. The IBF will be a common platform for a cross section of companies and individuals.

Both sides are looking at a trade target of USD 25 billion by 2015. A few years ago, pre-negotiation consultations had begun on a Comprehensive Economic Cooperation Agreement (CECA). Officials say talks could begin soon.

Indonesia's Trade Mnister Gita Wirjawan says India and Indonesia are yet to achieve the true potential of their economic partnership. Prime Minister Manmohan Singh's visit is expected give a push in that direction.

(Saroj Mohanty can be contacted at saroj.m@ians.in)

(Posted on 10-10-2013)