China’s Vice Prime Minister to Visit Indonesia

“Chinese vice Premier Li Keqiang will pay official visits to Indonesia, Egypt, and Kuwait, from December 20 to 30”, reported news.xinhuanet.com on December 16. In the case of Indonesia, does it mean that there will be more agreements involving money that will be signed by the leaders of the two countries? If yes, can we say that the case of Vientiane will not happen in Indonesia, at least not now?

According to one of my informants, there will be “second stage of loan” to be discussed (and may be signed) soon. The loan may be used to finalise the Suramadu Bridge, a bridge connecting Java (the most populated Island in this country) and another island next to it. The founding of the bridge was started in 2003 with the financial and technical assistance from China.

Apart from the bridge project, it is also worth noted that Indonesia is recently to some extents relying on China for its power plant projects too. A local newspaper in East Java reported a week ago (Jawa Pos, Dec 13th) that Indonesia’s state’s owned power company (PT PLN) is in the middle of approaching China to gain more funding for its power projects. Among the banks that this company approaches are Bank of China, China Exim Bank, and China Development Bank.

But now, as the global recession is influencing many countries, including China, will China decide to continue giving more funding to Indonesia? Again, if the answer is yes, then a question of what is going on behind this decision will be an interesting question to pose.

jherlijanto

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2 Responses to China’s Vice Prime Minister to Visit Indonesia

  1. Ali Adolf Wu says:

    Indeed, I think it will be interesting to see whether the global recession will be an opportunity for China to “adjust” (they like this term!) its foreign aid/investment policies. After the Vientiane Times report yesterday about investors halting power projects in Laos (see the previous post), there are three articles in today’s issue about the effects of dropping demand from China. One is about the Sepon copper mine (I believe Australian-owned) in Savannakhet laying off more than half of its work force, over 3000 people (most of them casual day workers, which is interesting to note) because of a nearly threefold fall in the price of copper (“Sepon mine lays off 3,000 workers,” Vientiane Times, 18 Dec 2008). Most of the mine’s exports are to China. Another is about a 50% drop in furniture shipments to China, and a third article is about cassava, which has been grown on 100 ha in Oudomxay Province under an agreement between the provincial government and a Chinese company, which provides seed and has agreed to buy the crop for ten years at prices fixed a year in advance. But they did not show up to buy the crop and the farmers have no means of livelihood. The situation must be grave if the director of the provincial Commerce Department made it public to journalists (such conflicts tend to be swept under the rug, I am told, in the name of not alienating investors). (Khamphone Syvongxay, “Foreign company lets down Oudomxay farmers,” Vientiane Times, 18 December.)

    The question arises whether this downturn will serve as an opportunity for China to try and reign in Chinese companies’ activities abroad, or indeed for the large companies themselves to implement stricter standards. I have been told about a Western-owned mine in Laos whose general manager has been regularly invited by his main Chinese client on golf-and-wine junkets in Yunnan. But after the last one, his Chinese counterpart was executed for corruption. Of course, it will also be very interesting to see whether experiences such as the one with the cassava will make farmers more cautious in embracing monoculture crops under contracts for the Chinese market.

  2. mqvu says:

    Yet another article in the Vientiane Times clarifies that the Sepon mine is owned by OZ Minerals, a company that has in the last few days been teetering on the verge of collapsing under its debts (see e.g. Matt Chambers, “OZ Minerals calls for suitors willing to invest,” The Australian, December 19, 2008).

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