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Work Together to Write a New Chapter in China-Indonesia Economic Cooperation

Speech by Chargé d'affaires Liu Hongyang

At the "Indonesia's Next Chapter" Seminar hosted by

The Indonesia-China Friendship Association

Jakarta, 19 November 2014

His Excellency Coordinating Minister Sofyan Djalil,

His Excellency Vice Foreign Minister Abdurrahman Fachir,

Chairman Bondan Gunawan,

Ladies and Gentlemen,

Selamat Siang!

First of all, I want to thank the PPIT for this warm invitation to me to today's seminar. The theme of the seminar, "Indonesia's Next Chapter", can't be more timely and relevant. In the early days of the Indonesian new government, this event offers a brilliant platform to discuss the future economic opportunities and challenges of this country. I'm very happy to share thoughts with you on these topics and look forward to hearing your insights and analysis.

The world economy today is facing various risks and challenges. This has drawn broad attention and become a central topic of world leaders in the recent APEC Meetings, East Asia Leaders' Meetings and G20 Summit. The East Asia has shown relatively strong momentum of development, but our challenges are many. Under such circumstances, our region must remain committed to development as our number one priority. And the best way to achieve shared prosperity is wider and deeper win-win cooperation. We are pleased to see that developing economy and improving people's livelihood have come on top of the Indonesian new government's agenda. And economic diplomacy is now at the heart of Indonesia's foreign policy. We in China are also committed to economic development. We pursue steady growth, in-depth reform and structural adjustment and seek to improve the life quality of our people. Going forward, China and Indonesia should join hands to promote development for our own countries and our region as a whole. To do that, we should explore ways to coordinate our development strategies and deepen practical cooperation in economic and other realms. In this regard, I wish to share with you some of my observations on expanding and deepening China-Indonesia business ties.

Trade has always been a significant bond in the long history of China -Indonesia friendly exchanges. For many centuries, the merchant ships carrying Chinese porcelain, silk and Indonesian spice and gem stones shuttled back and forth between our two nations. They acted as a bridge of commerce and a messenger of goodwill. In the 21st century, especially since the establishment of strategic partnership between China and Indonesia in 2005, our business cooperation has deepened in various areas and moved into a new stage. Last year, our bilateral trade reached 68.36 billion US dollars. China is now Indonesia's largest trading partner. China's non-financial direct investment in Indonesia has come to 760 million US dollars. That's a 26.7% increase year-on-year. The power plants built by Chinese enterprises now make up one quarter of Indonesia's power supply. One of our cooperation projects, the Surabaya-Madura Bridge, is Indonesia's longest cross-sea bridge. It has facilitated the transport and flow of commerce between Java and Madura Island. The Jati Gede Dam, Indonesia's second-largest, is due to be completed early next year and will provide irrigation to 90,000 hectares of farmland. At the same time, Indonesian investment in China has also made contribution to China's economy.

In October last year, Chinese President Xi Jinping paid a state visit to Indonesia. The leaders of our two countries agreed to lift our bilateral relations to a comprehensive strategic partnership. In his speech at Indonesia's House of Representatives, President Xi announced the initiative to build a '21st Century Maritime Silk Road'. The intention is to revive the silk road spirit of peace, friendship, openness, inclusiveness and mutual benefit. This will boost the wide-ranging win-win partnership among China, Indonesia and other coastal states of the maritime silk road in the new era. The 'Maritime Silk Road' initiative is to promote five-way progress in policy communication, infrastructure connectivity, trade link, capital flow, and understanding among peoples, and to create a community of common destinies. At the same time, we are deeply impressed by President Joko Widodo's focus to develop marine economy, build ocean highways and turn Indonesia into a 'global maritime axis'. Our two countries' development strategies have a lot in common and can complement each other. 10 days ago, President Xi Jinping and Premier Li Keqiang had separate meetings with President Joko Widodo in Beijing on the sidelines of the APEC Meetings. Our leaders reached important agreement on coordinating development strategies and promoting cooperation in marine economy and infrastructure. This clear high-level guidance has pointed the direction and mapped out the blueprint for our bilateral commercial cooperation.

China is ready to work with Indonesia to fully implement the important consensus reached by our leaders, deepen economic and trade cooperation and work together for common development. We should translate our comprehensive strategic partnership into more tangible benefits to our two peoples. I suggest our two sides focus on strengthening cooperation in the following areas:

First, infrastructure. We Chinese have a saying, "To get rich, build roads first." Infrastructure deficit has long been a major bottleneck in Indonesia's investment and economic growth. China has technology, expertise and financial strength in infrastructure. We are a strong supporter of the Indonesia's infrastructure agenda. We are ready to participate in the investment, construction and operation of sea ports, power plants, roads, railways, airports and bridges in Indonesia, and provide support in planning and design.

Second, marine economy. Indonesia is the world's largest archipelagic state. The growth of Indonesia's marine economy has strong potential and broad prospect. President Joko Widodo's 'maritime axis' ambition not only revives a glorious tradition, but is also a realistic and forward-looking strategy. China fully supports this vision and is ready to coordinate our maritime strategies with Indonesia. We hope to strengthen cooperation with Indonesia in ship building and repair, fishing and processing, offshore oil and gas exploration, island development, marine scientific research and environmental protection.

Third, industrial parks. Indonesia's new government is planning to build more industrial parks to promote balanced development between the western and eastern regions. During President Xi Jinping's state visit to Indonesia last year, our two countries signed agreement to build mineral smelting-processing industrial parks. Today, Chinese enterprises have built up over ten smelting plants in eastern Indonesia. We will encourage Chinese enterprises to make further investment in Indonesia to build more smelting, manufacturing, agricultural and fishery industrial parks.

Fourth, agriculture. Both China and Indonesia have large agricultural sectors. We are deeply aware that food security is essential to people's livelihood. China has helped Indonesia cultivate over 100,000 hectares of hybrid paddy rice. As a result of this endeavor, Indonesia's paddy rice output is up from 5 tons to 9 tons per hectare. Now, the efforts are underway to bring paddy rice farming to more regions of Indonesia. We will encourage Chinese businesses to invest more in Indonesia to develop agricultural plantations, pasture lands and fishing grounds. Meanwhile, water conservancy, food storage, machinery, fertilizer, processing and agricultural technology are also potential areas where our cooperation should be boosted.

To facilitate 'early harvest' in the above key cooperative areas, our two presidents have agreed to launch the vice-premier level economic cooperation mechanism between our two countries as early as possible. We welcome His Excellency Coordinating Minister Sofyan Djalil to visit Beijing soon to hold the first meeting of this mechanism.

Ladies and Gentlemen,

To promote the development of China-Indonesia economic cooperation in the new era, China is committed to strengthen our support in the following areas.

First, increase financial support. China has 4 trillion dollar foreign exchange reserves, and invests over 100 billion US dollars abroad every year. On the basis of equal consultations, we are ready to finance Indonesia's infrastructure projects through a number of ways. These include inter-governmental loans, commercial credit, the Silk Road Fund, the China-ASEAN maritime cooperation fund, the China-Indonesia maritime cooperation fund and the China-ASEAN Investment Cooperation Fund. We welcome Indonesia to join the Asia Infrastructure Investment Bank (AIIB) as a founding member at an early date. This is expected to give Indonesia wider access to financial resources in its infrastructure programs.

Second, expand import from Indonesia. China is willing to pursue fast and balanced growth of bilateral trade with Indonesia on the basis of equality and complementarity. We will import more competitive and quality products from Indonesia, such as oil, gas, rubber, vegetable oil, coffee, wood pulp, bird's nest and fruits. We welcome Indonesian enterprises to explore the Chinese market, and further elevate the public recognition and competitiveness of their products. I believe that, with the joint efforts of our two sides, more Indonesian products will come into the Chinese market. And our two-way trade will reach the 80 billion US dollar target by 2015.

Third, advance free trade arrangements. China is ready to work together with Indonesia and other parties to upgrade the China-ASEAN Free Trade Area and conclude the Regional Comprehensive Economic Partnership (RCEP) by the end of 2015. We should work together to move forward the process of the Asia-Pacific Free Trade Area, enhance investment and trade liberalization and facilitation in the region, and promote economic integration in East Asia and the wider Asia-Pacific region.

As a Chinese idiom goes, 'one needs to build a nest to attract phoenix'. This vivid metaphor is just as revealing in economics. It's a good example of the critical importance of an investor-friendly climate. We hope the Indonesian government will keep its investment policy consistent and stable, and create a one-roof service for investment approval soon. In this regard, we look forward to further progress in streamlining visa procedures for business travelers, and affording investors more convenience and preferential treatment in terms of land, fees and tax. We believe that under President Joko Widodo's outstanding leadership, Indonesia will usher in a new era of growth and opportunity for global investors, and is able to attract more phoenixes to this country.

Ladies and Gentlemen,

China is the largest country in Asia. Indonesia is the leader of ASEAN. Our two countries are friendly neighbors and comprehensive strategic partners. We are both major emerging economies, large developing countries and important members of the G20. As our Foreign Minister Wang Yi said to Foreign Minister Retno earlier this month in Jakarta, the China-Indonesia strategic cooperation is not only bilateral, but also covers regional and multilateral dimensions. Deepening economic cooperation serves our two countries' own development. It also contributes to the prosperity of Asia, the solidarity of the developing world, and the growth of the world economy. China is ready to work together with Indonesia to write a new chapter in our economic cooperation. In doing so, we will further enrich our comprehensive strategic partnership and create a better future for our two countries, our region and our world.

Thank you. Terima Kasih!

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