German Chancellor Angela Merkel is set to arrive in Indonesia on Tuesday for her first official visit to Southeast Asia’s largest economy for talks with President Susilo Bambang Yudhoyono and business leaders.
Merkel is expected during her visit to sign a comprehensive economic agreement between Germany and Indonesia. She’s hoping to boost German investment in Indonesia, including in infrastructure, and to provide expertise in geothermal energy.
Merkel is also expected to extend cultural ties with Indonesia, such as in education. She will be accompanied by a 30-member delegation comprising businesspeople from across the economy.
Business executives in Indonesia hope that Merkel’s two-day visit will help boost investment from Germany, the largest economy in Europe.
“The visit signifies greater awareness in Germany about the dynamic Indonesian economy,” said Ramesh Divyanathan, president director of BMW Group Indonesia. “There are still many companies that are fixated on China and India; hopefully this visit will change that. A truly global company cannot afford to ignore Indonesia.”
In terms of foreign investment in Indonesia, Germany ranked 10th, at $158.1 million in 2011, less than Taiwan’s $243.2 million and Britain’s $419 million. German investment reached $19.3 million in the first quarter this year, according to data from Indonesia’s Investment Coordinating Board (BKPM).
Indonesia’s economic growth rate of more than 6 percent means the Southeast Asian nation needs capital goods for the construction of factories and machines, sectors in which Germany excels.
“In term of quality, it’s difficult to replace Germany. Demand for their goods will be always there,” said Fauzi Ichsan, an economist at Standard Chartered bank.
“Meanwhile, Indonesia’s exports mainly consist of commodities, of which prices have been declining due to the crisis. So, the government should use this visit to ask for Germany’s commitment to resolve it.”
Imports from Germany mainly consist of machinery, chemical products, communications technology, electricity generation and distribution equipment, electronic components, metals, motor vehicles and pharmaceutical products.
Indonesia’s main exports to Germany are food — mainly vegetable oils and fats — textiles, agricultural products, electronic devices, footwear and ores.
Christoph Seemann, head of cultural and press affairs at the German Embassy in Jakarta, decline to comment on the details of the two days of discussions.
“There are talks in the pipelines such as bilateral cooperations in economy and education. But I cannot tell you what will be announced,” he said on Monday.
Seemann said Merkel’s agenda in Jakarta will include a visit to Kalibata National Cemetery Park, the Immanuel Church and the Istiqlal Mosque. She is also slated to meet with Constitutional Court chief justice Mahfud M.D. and attend a forum with German and Indonesian executives.
Merkel will be accompanied by Germany’s state secretary for economic affairs, parliamentarians and representatives of top German companies.
Merkel’s visit is part of the commemoration of the 60th anniversary of the Indonesia-Germany relationship, and in response to President Susilo Bambang Yudhoyono’s visit to Germany in 2009.
Hatta Rajasa, the coordinating minister for economic affairs, said on Friday that the government was seeking to double trade with Germany within the next three years.
“In 2015, we must be able to reach at least $12 billion. We will ask Germany to invest in Indonesia more aggressively,” Hatta said. Trade by value between the two countries last year was $6.69 billion, a 12 percent rise from $5.98 billion in 2010, according to data from the Central Statistics Agency (BPS).
Beyond trade and investment, Hatta said the government wanted to improve ties with Germany in technology, education, health care, science and research.
Marty Natalegawa, the foreign affairs minister, said that Indonesian and German representatives would discuss a bilateral comprehensive economic partnership agreement in order to boost trade and investment. “In the visit, we will launch the Jakarta Declaration, covering a comprehensive partnership between Indonesia and Germany,” he said.
Around 250 German companies operate in Indonesia, including large corporations such as global electronics and electrical manufacturer Siemens, the world’s largest chemical company BASF, automakers BMW and Mercedes-Benz, international logistics company Deutche Post DHL, pharmaceutical company Merck, insurance company Allianz, and lender Deutsche Bank.
Merkel’s visit to Indonesia shows that the country’s rising political clout on the global stage, analysts from the University of Indonesia said.
Hariyadi Wirawan, head of the university’s international relations department, called Merkel’s visit a symbol of great respect.
“She comes all the way from Europe, and she will only visit Jakarta,” Hariyadi told the Jakarta Globe. “Germany must see Indonesia as a rising power in terms of economics and politics in Asia.”
Hariyadi said that besides strengthening economic ties, the main focus of Merkel’s visit, Indonesia and Germany should form partnerships on other fronts, including addressing international issues and fostering cultural and educational exchange.
“Germany is Europe’s biggest economy, and Indonesia is Southeast Asia’s biggest entity. It’s only natural that the cooperation will move beyond the economy,” he said.
Makmur Keliat, another academic from UI’s international relations department, said Merkel’s visit would boost understanding between the two countries.
“Enhancing ties with Germany shows Indonesia’s pragmatism in its foreign policy,” he said.