Indonesia - Germany cozying up to Indonesia to revamp ties

The ties between Germany and Indonesia, which established diplomatic relations in 1952, never went beyond "good" in diplomatic terminology.

But in recent years Germany is unable to resist a special partnership with a country of 240 million people and a trillion-dollar economy whose economy has grown 6.5 per cent in 2011. "Because of its high growth rates, Indonesia needs a lot of capital goods. In terms of quality, this is where Germany has a strong advantage," Haryo Aswicahyono, a researcher from the Centre for Strategic and International Studies, told the German broadcaster DW recently.

German Chancellor Angela Merkel's arrival in Jakarta today would certainly be a move in the right direction. Her visit is perfectly timed, on the 60th anniversary of the establishment of diplomatic relations. But the question is why it has taken 60 years for both countries to realise the real potential of one another and reap the benefits?

Basically, for most of the last few decades, Germany has focused too much on its unification on one side and with European Union neighbours, Russia, China and its Trans-Atlantic Relationship with the United States on the other.

"Due to our internal situation and developments in Europe, we didn't focus much on Indonesia. Now we are back on track again," said Ambassador Cyrill Jean Nunn, German Foreign Ministry’s director general for Asia-Pacific affairs, in Jakarta.

While Indonesia for many years, has focused its attention on the transition from dictatorship to democracy and rebuilding its economy from the damage of the devastating 1998 Asian financial crisis. On the external front, Association of Southeast Asian Nations (Asean) affairs are main priority for Indonesian foreign policy and Jakarta is heavily dependent on East Asia, Asean, India, Australia and the US for trade and investment.

There is another angle for why Germany and Indonesia ignored each other for a long time. Most of Indonesia's exports, which reached US$203 billion in 2011, are primarily raw materials and they are not needed by Germany while Berlin's high-tech products are out of reach for an emerging market like Indonesia. So there has been a mismatch.

Ever since the historic bilateral consultation in April 2010, in Jakarta, relations were on a fast trajectory.

Bilateral trade has grown rapidly. Based on the data from the Indonesia's Central Statistics Agency, bilateral trade jumped to $6.69 billion (Indonesia's exports $3.30 billion and imports $3.39 billion) in 2011, a steady jump from $5.99 billion in 2010. But based on data from Germany's Federal Foreign Office, two-way trade reached $8.22 billion (Germany's exports $4.17 billion and imports $4.05 billion) in 2011. But these figures of exports and imports do not commensurate with the real strengths of both Germany and Indonesia. These are small drops in a big ocean.

Based on the World Trade Organisation's 2011 trade data, German exports were $1,474 billion and imports were $1,254 billion, making it the world's third biggest exporter as well as importer.

Indonesia mainly exports food items, vegetable oil and fats, textiles, agricultural products, electronic devices, footwear and ores to Germany while it imports machinery, chemical products, communications technology, electrical equipment, electronics, metals, automobiles and medicines from Berlin.

On the investment front, according to the German-Indonesian Chamber of Industry and Commerce (Ekonid), some 250 German companies are currently operating in Indonesia, their cumulative investment more than $40 billion.

More and more German businessmen will come to Indonesia in the future as Berlin wants to make Indonesia a production hub for goods to be distributed in growing Asian markets. Merkel will lay the foundation for future relationship during her visit. A bright future is ahead.

Veeramalla Anjaiah
The Jakarta Post

Business & Investment Opportunities 
YourVietnamExpert is a division of Saigon Business Corporation Pte Ltd, Incorporated in Singapore since 1994. As Your Business Companion, we propose a range of services in Strategy, Investment and Management, focusing Healthcare and Life Science with expertise in ASEAN. We also propose Higher Education, as a bridge between educational structures and industries, by supporting international programmes. Many thanks for visiting www.yourvietnamexpert.com and/or contacting us at contact@yourvietnamexpert.com