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Indonesia’s move to amend coal export norms has impacted India’s power sector in particular. Despite India raising concerns over it, both countries are in the midst of negotiating free trade agreement (FTA) to further increase trade and investments. In an interview Indonesia’s Ambassador Rizali Wilmar Indrakesuma spoke to Sanjay Jog on range of issues
Coal importers and power companies in particular in India have expressed concerns over Indonesia’s new regulations requiring all foreign mining companies to sell majority stakes in their mining operations to locals by the tenth year of production. What is your comment?
I would prefer to see the issue from the perspective of Indonesia’s current efforts to reassess find a balance between our own the domestic needs and our capacity. It also relates to our potential of exporting the coal while concurrently also exploring the possibilities of extracting more the products. I would say that the government now feels the need for some sort of a restrain in exporting our coal. We really do not see a full stop to coal exports but at more regulated pace and with more clarity on the modalities by which the export is being conducted.
There is also anxiety whether it is really the best coal export policy or there should be regulation on the export of particular quality or class or percentage of coal. By the same token, we are also attempting to look at the possibilities of exports from the point of view of value added dimension.
Are there any talks so far held at the diplomatic and government levels to relook the regulations?
Formally, I am not aware of such talks. I do get feedbacks and concerns informally from some of our Indian counterparts. I can only say at this point that perhaps Indian importers need also to have a comprehensive awareness of the whole objective or rationale behind these new regulations. This is where constant dialogue and communication would play a major role at in understanding their Indonesian counterparts’ stance on this very issue of coal trade with Indonesia.
How India and Indonesia are positioned to further extend their ties for growth of trade and investments?
The bilateral relations and economic cooperation between India and Indonesia were neglected in 60s, 70s, 80s, 90s. Nothing really significant had happened. Of course the relations have always good and cordial, but that was just about it. During that particular past our relations were lukewarm, whereas it should have been more intense. Only at the beginning of this century did our leaders apparently realized that we need each other to make use of the situation, to make use of this globalization and to make use of these abundances between countries, and only since then were steps being taken to exploit the potentials of our bilateral relations.
In a way that has already been proved since 2005 after signing the strategic partnership agreement between the leaders of our two countries, and almost immediately tangible results began to emerge. A case in point is our trade. In 2005 the two way trade was around $5 billion. The two trade ministers set a target of $10 billion in 2010, and it was achieved in 2009. That was the indication of how the potential between our countries can further be harnessed. In 2011 the trade rose to $18 billion but decreased in 2012 due to the global economic slowdown. Still, we have set a new target of $25 billion by 2015.
Are India and Indonesia mulling free trade agreement (FTA)?
It is in making. Both the countries have arrived at a consensus to enter into the India Indonesia Comprehensive Economic Cooperation Agreement (II-CECA). It all started with a joint study group. This study group produced a document which was endorsed by both the governments with how to proceed with further negotiations.
We hope to start negotiations at the start of the second half of this year onwards. We are pretty optimistic since we know the possible areas of cooperation and what would be the possible difficulties. The objective is to protect the interests of our respective countries but at the same time promote economic cooperation.
What are the key areas in focus for cooperation?
Trade is already going on. Indonesia have provided coal, palm oil and rubber to India, but we need to go further. India is exporting textiles, automotive products. We are also expecting investments from Indian companies, i.e. in the automotive industry sector. TVS is already there. There are talks about Tata are exploring further investments in Indonesia. I have even heard about the possibilities of Nano being produced in Indonesia, because the level of consumption of motor cars is increasing in our country. However, no concrete plans have emerged just yet.
The close economic cooperation between India and Indonesia could also be reflected in both our capacities as member countries of the G20 and East Asian Summit where our common economic interests could be brought to attention. After all, both India and Indonesia has proven their economic strength through their ever increasing GDP which puts us both in the one trillion dollar club .
How India and Indonesia are organised to fight the global terrorism?
It is agreed by both the countries that we are facing the same threat of terrorism. Even our perception threats are somewhat similar in characteristics. That is why in the strategic partnership agreement also includes cooperation in fighting against terrorism. A Joint Working Group on Counter-Terrorism has already been established. The first meeting of the working group was held in Indonesia in 2011 and we are now planning to have second meeting of the working group in Delhi in the current year. The working group consists of senior officials from concerned agencies of both countries, and addresses the issue of counter-terrorism.
