Jurisdiction - China
Indonesia – State Open To Chinese Investment And Economic Ties, Says President.

1 April, 2015


It is time for Indonesia to get serious about bilateral trade, investment and infrastructure links with China, president Joko Widodo has told the South China Morning Post.

In an interview given before Widodo travelled to China for a state visit, he said that toll roads, railways, power plants and ports would all be possible investment projects for Chinese and Indonesian state and private companies.


“We want to focus specifically on infrastructure and manufacturing developments,” he told the South China Morning Post.


Widodo said that he planned to ask Chinese president Xi Jinping for more details on China’s Maritime Silk Road initiative before he could endorse it himself, the South China Morning Post said.


China’s 21st Century Maritime Silk Road and Silk Road Economic Belt initiatives form a development strategy that president Xi called One Belt, One Road. It refers to an economic belt linking China with Europe through Central and Western Asia, and a maritime route connecting China with Southeast Asian countries, Africa and Europe, according to Caixin Online.


“I don’t know the details of the Silk Road agenda,” Widodo said. “But if the cooperation can give benefits to my people and can give benefit to our national interest and also to China, okay,” he said, the South China Morning Post reported.


Widodo and Xi are also expected to sign a memorandum of understanding to boost ties in areas including the building of a power plant project in Indonesia, the South China Morning Post said.


The country has faced two obstacles in attracting Chinese investment, Widodo told the South China Morning Post: bureaucratic red tape for business projects, and issues of land acquisition for large projects. He said that he was attempting to cut red tape, and had introduced new regulations to simplify land acquisition.


He said that he had been impressed at the speed with which China had made progress over the past few decades.


“We can learn from China, to make toll roads very fast, railway tracks very fast, trains very fast,” he said, the South China Morning Post reported.


Hong Kong-based energy law expert John Yeap of Pinsent Masons said: “Indonesia has had an up-down relationship with Chinese investment over the past decade, particularly in the power sector. We saw active Chinese involvement as the EPC [engineering, procurement and construction] contractor in the Indonesia fast track power programme. But then interest waned with some of the competitively bid projects.”


“More recently we have seen a resurgence of active engagement between China and Indonesia in this sector, and this announcement can be seen as confirmation that the relationship is on again, which is good news for both countries,” he said.


Indonesia recently announced that it is seeking USD 7bn in foreign investment to upgrade its ports as part of a five-year, IDR 5,519.4tn (USD 429m) plan to improve its ports network.


Widodo told the South China Morning Post that he had was ready to propose four locations on Sumatra and three on Kalimantan where ports occult be jointly developed with China. 


Pinsent Masons


For further information, please contact:


John Yeap, Partner, Pinsent Masons

[email protected]


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