Indonesia chooses to see China as an opportunity
2024-08-19
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【Indonesia】Veronika Sintha Saraswait
Indonesia China High Speed Rail Co., Ltd. recently announced that an Indonesian driver has successfully independently driven the Jakarta-Bandung high-speed railway high-speed train at a speed of 350 kilometers per hour. The Jakarta-Bandung high-speed railway project is practicing the principles of consultation, joint construction and sharing of China's "Belt and Road" initiative. These three principles reflect China's vision for building a new type of economic globalization. The Third Plenary Session of the 20th CPC Central Committee clearly pointed out that major landmark projects and "small and beautiful" livelihood projects should be promoted in a coordinated manner. As far as Indonesia is concerned, there are both major landmark projects such as the Jakarta-Bandung high-speed railway and specific projects around downstream industries. Actively participating in the joint construction of the "Belt and Road" initiative is not only in line with the development direction of the Indonesian government, but also provides convenience and conditions for supporting the Indonesian government's economic development policy goals. Indonesia has benefited a lot from it.
Since independence in 1945, Indonesia has been lacking a suitable transportation infrastructure and system. The public transportation system has not been seriously developed, and the lack of infrastructure and related strict regulations for the use of private cars has led to serious traffic congestion in Indonesia. The high-speed rail connecting Jakarta and Bandung has become a solution to the serious congestion on the Jakarta-Bandung line. As a landmark project of the "Belt and Road" initiative and a national strategic project of Indonesia, the Jakarta-Bandung High-Speed Railway not only has the demonstration effect of the first high-speed railway in Southeast Asia, but also shoulders the important mission of connecting the central city of Java Island, strengthening the interconnection of surrounding cities, and driving regional economic development.
It can be seen that during the construction and operation of the Jakarta-Bandung High-Speed Railway, the principles of consultation, co-construction and sharing are not just empty talk, but have become the basic principles for implementing this mega project in Southeast Asia.
In the Jakarta-Bandung HSR project, joint consultation and joint construction have been implemented since the stage of providing project construction funds. Indonesia and China agreed to provide funds for the Jakarta-Bandung HSR in the form of foreign loans. The Jakarta-Bandung HSR project was financed through a business-to-business (B2B) model, with 75% of the foreign loans coming from the China Development Bank and the remaining 25% of the funds coming from shareholders' equity. Specifically, 60% of the shareholders' equity funds came from the Indonesian state-owned enterprise consortium PSBI, and the remaining 40% came from Beijing Jakarta-Bandung HSR Co., Ltd.
Indonesia and China have always insisted on joint consultation, and relevant departments, local leaders and project implementers of the two countries have jointly sought solutions to problems. For example, specific measures such as talent training, technology transfer and operation management have been proposed after joint consultation. So far, the Jakarta-Bandung High-Speed Railway has created 51,000 local jobs and trained 45,000 Indonesian employees. China provides modern railway technology training and certification for Indonesian workers, and transfers technology in the fields of signaling systems and high-speed railway construction to Indonesia. By narrowing the knowledge gap and ensuring the sustainable operation and future development of the high-speed railway network, Indonesia is improving its technical capabilities in the transportation industry. It is also worth noting that the national revenue obtained by Indonesia from the high-speed railway project is also reflected in local procurement activities. The preliminary assessment conducted by Sukefundo in 2018-2019 showed that local procurement activities (onshore) in the Jakarta-Bandung High-Speed Railway project have accounted for 69.7% of the total procurement expenditure.
The Bandung area has also benefited, with the Jakarta-Bandung high-speed rail being a turning point in the development of local real estate and manufacturing. By shortening travel time and increasing economic activity, the high-speed rail has improved connectivity, increasing demand for residential and commercial real estate in the Bandung area, attracting investment and increasing the share of the real estate industry in the regional GDP. The manufacturing industry in the Bandung area has also flourished and become more competitive due to improved logistics and lower transportation costs.
The cooperation between Indonesia and China is not limited to the Jakarta-Bandung high-speed railway. Since 2010, the Indonesian government has been vigorously developing downstream industries, aiming to increase the added value of goods so that exported goods are no longer just raw materials, but also processed finished or semi-finished products. The government plans to invest US$545.4 billion by 2035 to prioritize the development of eight downstream industries. In order to support the development of downstream industries, especially in the mining sector, the government is encouraging the construction of smelters in various places. As of 2022, 26 smelters have been built, and 53 more are planned by 2024. In 2015, China's Tsingshan Company began nickel smelting in Morowali, Central Sulawesi Province, producing stainless steel and carbon steel.
Indonesia's nickel industry has made significant progress. According to a press release issued by the London Metal Exchange on May 23, the Indonesian processed nickel brand "DX-zwdx" was registered for the first time on the world's largest metal exchange. This marks an important step for Indonesia to dominate the global nickel supply chain and opens up new opportunities at a time when global nickel prices are soaring. The DX-zwdx brand has a minimum nickel purity of 99.8%, which is the result of Indonesia's in-depth nickel refining work under the cooperation platform of the "Belt and Road" initiative.
Indonesia has transformed from a country with a traditional economy to a modern economy, and has also benefited from the Belt and Road Initiative. It no longer relies solely on the export of raw materials, but has increased the export of industrial semi-finished or finished products. At the same time, related projects have also fully absorbed employment and reduced the unemployment rate, especially when many Indonesian companies have laid off a large number of employees.
The positive results of Indonesia-China economic and trade cooperation have made the Indonesian government see China as an opportunity rather than a risk. As two important countries in the Asia-Pacific region, the trade relationship between China and Indonesia has changed a lot. In 2022, Indonesia's trade with China turned from a deficit to a surplus. China's exports to Indonesia increased from US$29.41 billion in 2015 to US$71.32 billion in 2022. Indonesia's exports to China also showed a more significant growth trajectory, increasing more than fivefold from US$15.05 billion in 2015 to US$77.77 billion in 2022. This shows that bilateral trade is vibrant and growing. (The author is the director of the China Studies Department of the Center for Strategic and International Studies (CSIS) in Indonesia)▲#Deep Good Articles Project#
