Indonesia and Russia Keen on Boosting Economic Ties

Indonesia and Russia Keen on Boosting Economic Ties

Before attending the ASEAN-Russia Summit, President Joko Widodo (Jokowi) and his Russian counterpart Vladimir Putin held a bilateral meeting to discuss efforts to expand cooperation in various fields, particularly to increase trade between both nations.

“Our talks with the president of Indonesia have been substantive and constructive,” Putin stated in connection with the bilateral talks held at the Russian presidents residence in Sochi on May 19.

The meeting was certainly cordial as President Jokowi was present at Putins residence from 6:10 p.m. to about 9 p.m. local time for the meeting and signing of five memoranda of understanding. “I have fond memories of my visit to your country and the positive atmosphere created for our delegation during that visit. I hope that we will be able to reciprocate (this gesture) with our Russian hospitality during your visit,” Putin noted Antaranews reported.

Sochi has held special significance for the two countries, since Indonesias first President, Soekarno, was a close friend of Russia and had visited this city 60 years ago, remarked Putin.

Jokowi also praised the bilateral relations between Indonesia and Russia, which were established six decades ago. “Our bilateral relations, which have a long-standing history going back to the days of President Soekarno, should be intensified now. I also hope that economic, political, and cultural ties will be expanded further,” the Indonesian head of state added.

The two leaders witnessed the signing of five memoranda of understanding, covering issues in defense, archiving, eliminating illegal fishing, and cultural exchanges. From the Indonesian side, the MoUs were signed by Foreign Affairs Minister Retno Marsudi, Maritime Affairs and Fisheries Minister Susi Pudjiastuti, and Head of the National Archive Agency Mustari Irawan.

In the bilateral talks, Jokowi urged Russia to increase its palm oil imports from Indonesia. “With regard to trade, we need to look for new ways to boost the exports of palm oil from Indonesia to Russia in the near future,” President Jokowi stated, during a Wednesday evening meeting at the Russian presidents Bocharoc Rucey residence.

Indonesia has urged Russia to ease tariff and non-tariff barriers for Indonesian palm oil exports to the country. “Mr President, you are aware of the plans to increase the import tax on palm oil, which is the largest export commodity from Indonesia to Russia, with a value reaching US$480 million. Exports have fallen sharply, which is not favorable for our countrys economy,” he pointed out.

“I hope that your policies, Mr President, will help ensure that Indonesian palm oil exports to Russia will increase in the near future,” he noted.

Putin expressed his optimism of the bilateral trade which increased by 14 percent during the first three months of this year.

“We paid special attention to prospects for the development of trade. After a certain downturn in the volume of trade last year, positive dynamics have emerged this year: during the first three months of the year, the volume of bilateral trade increased by nearly 14 percent. I am sure that it is within our power not only to maintain this pace, but also to provide an additional impulse to the further development of our business ties, the Russian president noted.

The two countries also agreed to boost Russian investment in Indonesia, particularly in the fields of maritime, infrastructure, oil and gas, energy, and electricity. “There is good potential for expanding energy cooperation. Our companies — Zarubezhneft and Rosneft — have specific, serious large-scale projects, including the construction of a modern oil refinery on Java Island, with a possible investment of US$13 billion,” Putin revealed.

“Plans also include the construction of a 1.8-gigawatt thermal power station, with contribution from our company InterRAO and an investment of $2.8 billion. Rosatom is working on a project to build an experimental low-power reactor,” he added.

Putin also noted that Russia was ready to provide all necessary assistance to its Indonesian partners for implementing infrastructure projects. “Significant in this context is a joint project that was launched last year: a 190-kilometer-long railway line in Kalimantan, to be built by our company Russian Railways in conjunction with its partners. The project will create over 2.5 thousand jobs,” Putin noted.

The railway line will connect the resource-rich part of the island to a new port and industrial and technological cluster where manufacturing and processing enterprises will be located, also with a share of Russian capital, he explained. Cooperation plans also include the development of coal fields, the production of ferronickel, manganese dioxide, alumina, and more.

“Our companies are ready to provide Indonesia with high-speed hydrofoil vessels, catamarans, and floating piers and to supply modern equipment for the satellite monitoring of vessels. We have agreed to continue our collaboration in civil aviation,” the Russian president remarked.

Following the bilateral talks, Jokowi met with Russian entrepreneurs to discuss opportunities in Indonesias transport, mining and energy sectors, and to invite them to increase their investments in Indonesia.

The president was accompanied by Minister for Economic Affairs Darmin Nasution, Minister of Foreign Affairs Retno LP Marsudi, State Owned Enterprises Minister Rini Soemarno, Trade Minister Thomas Lembong, and Minister of Marine and Fisheries Susi Pudjiastuti.

The Russian entrepreneurs who met with President Widodo included Executive Director of Russian Railways Oleg Belozerof, Executive Director of Blackspace Group Aleksandr Sergeevich Isaev, Executive Director of En + Group Maxim Sokov and Executive Director of Vi Holding Group Alexander Popov.

Director of Russian Railways Oleg Belozerof expressed his appreciation to the President for the business and investment opportunities available in Indonesia.