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Full text:Why Belt and Road and Global Maritime Fulcrum Cooperation Benefits both China and Indonesia?
2019/09/02

On August 23, the Jakarta Post published a signed article by Spokesperson of Chinese Embassy in Jakarta on Why Belt and Road and Global Maritime Fulcrum Cooperation Benefits both China and Indonesia?. The full text is as follows:

Why Belt and Road and Global Maritime Fulcrum Cooperation Benefits both China and Indonesia?

The Jakarta Post published two articles The struggle to define the Belt and Road Initiative in Indonesia and How Indonesia can avoid the pitfalls of Belt and Road cooperation respectively on 29th and 30th July. Regarding some points raised by the two articles, I would like to share some facts and make some clarification.

I. What is the Belt and Road Initiative and what it brings to the world?

In September 2013, Chinese President Xi Jinping proposed the Silk Road Economic Belt and in October, the 21st-Century Maritime Silk Road, together now referred to as the Belt and Road Initiative (BRI). BRI intends to promote synergy among development strategies of different countries, tap on market potential within the region, promote investment and consumption, create demand and jobs, and increase people-to-people exchanges and mutual learning between civilizations, all in an effort to cultivate understanding and mutual respect among peoples of different countries and share a life of harmony, peace and prosperity. The essence of BRI is to enhance policy, infrastructure, trade, financial and people-to-people connectivity.

Six years since its inaugural, the BRI has brought tremendous development opportunities and benefits to the peoples of all countries involved. For example, the trade between China and countries participating in the BRI has reached more than 6 trillion USD while investment more than 80 billion USD; 82 overseas cooperation parks have been built with the joint efforts of China and hosting countries, creating about 300,000 jobs for local communities.

The UN Secretary-General has said on many occasions that the BRI is significant to the UN global poverty reduction goal. According to researches by global institutions such as the World Bank, BRI cooperation will reduce global trade cost by 1.1% to 2.2%, contributing at least 1% to world economic growth in 2019. The BRI has become the largest platform for international cooperation in terms of capacity, and the most popular public good in the world. To this date, 126 countries and 29 international organizations have participated in BRI cooperation, and its concept and proposition have been included in the outcomes of the UN, G20, APEC, SCO (Shanghai Cooperation Organization) and other important international mechanisms.

II. What outcomes have Belt and Road and Global Maritime Fulcrum Cooperation achieved so far?

It was here in Indonesia in 2013 that the 21st Century Maritime Silk Road Initiative was first proposed by President Xi Jinping during his state visit to Indonesia. In 2014, President Joko Widodo proposed the Global Maritime Fulcrum Vision (GMF), which relates profoundly to the concept, goals, and areas of the BRI. President Xi and President Jokowi thus reached important consensus on promoting synergy between BRI and GMF, for the benefits of the peoples of both countries. In the past few years, both sides have worked together diligently and achieved fruitful outcomes.

In terms of policy connectivity, President Xi visited Indonesia twice while President Jokowi visited China 5 times. The two presidents have met for 8 times on bilateral or multilateral occasions. The two governments have signed a Memorandum of Understanding on jointly promoting cooperation within the framework of BRI and GMF.

In terms of infrastructure connectivity, the Chinese side supports the building of the Maritime Highway proposed by President Jokowi and has participated in strategic and major infrastructure projects in Indonesia such as road, railway, and port. The Jakarta-Bandung High-Speed Railway (HSR) is the flagship project of first-stage strategic alignment. Its construction has now entered a new phase. In addition, the two sides have began intergovernmental cooperation on the Regional Comprehensive Economic Corridor which is the flagship project of second-stage strategic alignment, of which some early-harvest projects are well underway. At present, the two sides are exploring cooperation on industrialization, which could become the new highlight in synergizing development strategies between the two countries.

In terms of trade connectivity, recent years have witnessed fast growth of China-Indonesia trade. In 2018, two-way trade registered a new historic high of 77.4 billion USD. China has remained the largest trade partner for Indonesia in the past 8 years.

In terms of financial connectivity, China’s investment in Indonesia has maintained fast and constant growth, ranking China as the third largest source of foreign investment for Indonesia. Last year, the two sides renewed the currency swap agreement, expanding the capital pool to 200 billion RMB. Indonesia is also a founding member of the Asia Infrastructure Investment Bank (AIIB), holding an important position in AIIB and received over a billion USD worth of loan for infrastructure development.

In terms of people-to-people connectivity, China remains Indonesia’s main source of foreign tourists. Last year, 2.14 million visits to Indonesia were paid by Chinese tourists. Now, more than 15,000 Indonesian students are studying in China and the number is still growing. China is now the second favorite overseas education destination for Indonesian students. In the coming five years, the Chinese side will provide 3,000 government scholarships to Indonesian students.

III. How Belt and Road and Global Maritime Fulcrum cooperation benefits Indonesia?

The cooperation between China and Indonesia is mutually-beneficial in nature. Synergizing our respective development strategies has brought high-quality Indonesian products for ordinary Chinese consumers, outstanding Indonesian students to Chinese colleges and universities, reliable partners and broader prospects for Chinese businesses. Plus, Chinese tourists can now enjoy a beautiful Indonesia. Overall, synergizing our respective development strategies has created favorable conditions for China’s development and brought many development opportunities for Indonesia as well.

First, to promote balanced development of different regions in Indonesia. The Jakarta-Bandung HSR will not only shorten commute time between the two cities from more than 3 hours to around 40 minutes but also create an economic belt and change people’s perception and way of commute, thus driving growth along the way. The Regional Comprehensive Economic Corridor will help Indonesia to develop islands apart from Java.

Second, to ease financial burden, increase financial resilience and create new jobs. China’s investment will help to ease Indonesia’s financial burden in terms of infrastructure building, human resource development, and social welfare projects. By expanding the current swap between the two countries, Indonesia will enjoy better resilience against financial risks and maintain a stable currency. The two-way investment, trade and personnel exchange creates new job opportunities for Indonesia. For instance, Huawei Indonesia now has over 2,500 staff. And local staff accounts for 86% of the workforce. The company indirectly generates more than 20,000 jobs each year. The Jakarta-Bandung HSR, for another instance, has created about 8000 jobs, and the Qingshan Morowali Industrial Park in Sulawesi has created more than 30,000 jobs for the local communities.

Third, to expand Indonesia’s export to China. In recent years, Indonesia’s export to China has outpaced the growth overall two-way trade and Indonesia’s import from China. Export of quality products to China, including palm oil, coal, mangosteen, dragon fruits, and others has been expanding steadily. In 2018, China agreed to import an additional 500,000 tons of Indonesian palm oil, whereas the actual additional import has reached 1 million tons. During the first China Import-Expo last November, 36 Indonesian companies joined and sealed deals with a total amount of 4.74 billion USD, about 1/10 of the total amount of all deals reached during the Expo.

Fourth, to boost human resource development. Last April during Vice President Kalla’s visit to China, the two sides signed the MOU on Co-establishing China-Indonesia Joint Research Center on High-speed Railway Technology. This is significant for it helps to improve Indonesia’s capability in the areas of High-Speed Railway. Plus, Tsinghua University of China has set up an East Asia research center in Bali, which will also help with Indonesia’s human resource development for Industrialization 4.0.

IV. Is there any “trap” in Belt and Road and Global Maritime Fulcrum cooperation?

The BRI stays true to the principle of extensive consultation, joint contribution, and shared benefits, and is committed to the market approach from project selection to financing. Decisions are made by all stakeholders. China attaches great importance to the issue of debt sustainability. We do not impose anything, even less creating any sort of “trap”. China has never nor will ever seek to establish rules that dominated by only one country. The BRI is not an exclusive club, nor does it target any particular country. It is an open and inclusive initiative.

As for the debt issue in Sri Lanka, the government there has made clarifications. According to a report by Sri Lankan Central Bank, its total foreign debt was around 50 billion USD in 2017, among which 39% is sovereign bonds, 14% is loans from Asia Development Bank (ADB), 12% is loans from Japan, 11% is loans from the Work Bank. Only 10.6% of Sri Lanka’s foreign debt was from China, and among which 61.5% was concessional loans with an interest rate way lower than that of the international market. Sri Lankan Prime Minister Ranil Wickremesinghe once said Sri Lanka didn’t “fall into the debt trap” of China’s loans, and doing business with China does not pose a threat to Sri Lanka.

While China and Indonesia promote cooperation within the BRI and GMF framework, the Indonesian government has made clarifications regarding such issues as Chinese workers and debt. President Jokowi asked for the specific number of Chinese and Indonesian employees in the Qingshan Morowali Industrial Park in Sulawesi when he visited there, and the President concluded that “there is no such thing as Chinese worker invasion”. Indonesian Coordinating Minister for Maritime Affairs Luhut Binsar Pandjaitan once remarked in a BRI seminar that “Indonesia has nothing to do with ‘debt trap’. Indonesia gets loans from China with the principle of prudence, effectiveness, and transparency, and government loan remains within the safety zone.” It is evident that bilateral cooperation within the BRI and GMF creates no “trap”, but only unlimited opportunities.

Indonesia is an important neighbor of China. In recent years, Indonesia has enjoyed political stability, rapid economic growth, social stability and harmony, and tremendous development potential. Stronger cooperation between China and Indonesia serves the long-term and fundamental interest of both countries. China looks forward to working with all sectors of Indonesia to deepen BRI and GMF cooperation, thus share development opportunities.

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