Indonesia

Last updated in March 2012

Political relations

Indonesia and Germany have a tradition of good relations based on trust. Indonesia is playing an increasingly important role in efforts to develop relations between Europe and Asia.

Germany has a good reputation in Indonesia but must hold its own against strong regional “competition” in bilateral relations. New ground was broken here by former Federal President Christian Wulff’s official visit to Indonesia from 30 November to 2 December 2011.

Indonesian President Yudhoyono visited Germany in December 2009, holding talks with then Federal President Horst Köhler and Federal Chancellor Angela Merkel. He was accompanied by a delegation including Foreign Minister Natalegawa, who also met for bilateral talks with his German counterpart, Guido Westerwelle. Since then, there has been a sharp increase in mutual visits at parliamentary level: 2011 saw visits to Indonesia by Volker Kauder and German Bundestag Vice-President Wolfgang Thierse, as well as by delegations of various Bundestag committees.

Indonesia increasingly sees Germany as an important partner both bilaterally and in its relations with the European Union.

Germans’ compassion and willingness to help in the aftermath of the tsunami disaster in Aceh is remembered by the Indonesians and has had a positive impact on relations. The projects conducted under the so-called partnership initiative of private German donors, which were successfully concluded in late 2007, complete the picture in terms of German emergency assistance. The help provided by Germany following the 2009 earthquake was also well received.

Germany supports the reform process in Indonesia with a wide range of projects in the areas of good governance and building or strengthening administrative structures.

As the country with the world’s largest Muslim population, Indonesia is a major partner of Germany in dialogue on religious issues. The Second German-Indonesian Interfaith and Intercultural Dialogue between representatives of the two countries’ governments and numerous civil-society organizations, which was held in Berlin in October 2011, reflects the special commitment of both countries to wide-ranging exchange on the coexistence of religions. The Third German-Indonesian Interfaith and Intercultural Dialogue is to be held in in Makassar, South Sulawesi in 2012.

The series of events entitled ‘JERIN – Jerman dan Indonesia’, which was launched in October 2011, is leading up to the 60th anniversary of the establishment of diplomatic relations between the two countries in June 2012. JERIN features more than 60 events in 15 Indonesian cities and provides a platform for stepping up bilateral relations in the political, cultural, scientific, academic and economic sectors.

Economic relations

There are currently some 250 German companies operating in Indonesia, many with their own production facilities. They include not only global players but also many small and medium-sized companies covering a broad section of German business.

The German-Indonesian Chamber of Industry and Commerce (EKONID, a member of the German Chamber Network) represents the interests of its corporate members and promotes bilateral trade and investment between Indonesia and Germany. EKONID offers consulting on market development to German and Indonesian companies, supports them in their efforts to establish business relations and works together closely with partner organizations from Indonesia and Europe (www.indonesien.ahk.de).

Germany Trade & Invest (GTAI) is Germany’s official business promotion agency. Its job is to promote Germany as a business, investment and technology location as well as attracting new investors. GTAI advises Indonesian companies that are keen to extend their business activities to the German market and provides support in the form of foreign-trade information to German companies seeking to enter the Indonesian market (www.gtai.de).

The German industry and trade centre German Centre Indonesia in Serpong (www.germancentre.co.id) provides start-up assistance to small and medium-sized companies seeking to gain access to the Indonesian market. It offers production and office space complete with the necessary infrastructure and state-of-the-art communications.

The Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ), the KfW Development Bank and the German Development Bank have a continued presence in Indonesia.

The German Embassy remains in close touch with these institutions and is happy to help establish contacts where needed.

In 2011, the German Embassy assisted delegations from the German Bundestag’s Economics and Technology and Budget Committees, from the Federal Ministry for Food, Agriculture and Consumer Protection, the Federal Foreign Office and the Federal Ministry of Transport, Building and Urban Development, as well as business delegations from Bavaria, Baden-Württemberg and the Saarland, in economic policy talks with the relevant institutions and authorities in Indonesia.

German-Indonesian trade

The 2008/2009 global economic crisis led to a marked decline of around 10 per cent in Germany’s import and export trade with Indonesia. In 2010, however, there was a marked uptrend in overall trade, albeit at a low level. German exports to Indonesia grew by 26 per cent, to approximately USD 3 billion (2009: USD 2.36 billion), German imports from Indonesia also growing to approximately USD 3 billion (2009: USD 2.3 billion), a 28 per cent increase. This trend continued in 2011, with the total volume of bilateral trade growing by approximately 12 per cent, to EUR 6.7 billion. German exports to Indonesia increased by 12 per cent, to EUR 3.4 billion and German imports from Indonesia by 9.7 per cent, to EUR 3.3 billion.

Germany’s principal exports to Indonesia were machinery, primary and finished chemical products, communications technology, electricity generation and distribution equipment, electronic components, metals, motor vehicles and pharmaceutical products.

Germany’s main imports from Indonesia were food and feedstuffs (specifically: vegetable oils and fats), textiles, agricultural produce, electronic devices, footwear and ores.

German companies’ engagement in Indonesia

The severe recession suffered by the Indonesian economy in 1997/98 barely affected German companies. Although numerous companies in virtually all sectors suffered declines in sales – plant construction and the building industry in general were particularly hard hit – German firms, with only a few exceptions, did not withdraw from the Indonesian market. German companies active in Indonesia include Siemens and, in the chemical industry, BASF, Bayer/Schering, Beiersdorf, Merck, Henkel and Südchemie. Other major companies operating there are Allianz AG and Deutsche Bank in the finance and insurance sector, DHL, Schenker and Lufthansa in the transport sector and Heidelberger Zement, Fuchs Oil and Schott AG. Daimler/Mercedes-Benz and BMW assemble cars in Indonesia and are keen to expand their production there.

Companies like Siemens AG and LINDE AG plan to expand their activities in the energy sector. In January 2011, Schott-Solar resumed its operations in Indonesia. The German-Indonesian Chamber of Industry and Commerce (EKONID) has registered increased interest in the Indonesian market on the part of German companies. In 2011, German direct investment in Indonesia was worth EUR 159 million, compared with EUR 157.6 million in 2010.

Development cooperation

Indonesia is a priority country of German development cooperation, German-Indonesian having begun as early as the 1950s. The bilateral portfolio focuses on three priority areas: private sector promotion, good governance, and climate change and sustainable development. Providing funding worth approximately EUR 3.35 billion, Germany is Indonesia’s fourth largest bilateral development cooperation partner, after Japan, Australia and the USA. Germany supports development programmes in Indonesia through other sizable contributions made via multilateral institutions such as the United Nations, the World Bank, the Asian Development Bank and the European Development Fund.

Following new commitments worth EUR 327 million in 2010, 2011 saw pledges of EUR 158 million in Financial Cooperation (FC) and EUR 31 million in Technical Cooperation (TC).

Within the priority area good governance/decentralization, Germany is providing support for the reform process in Indonesia through an array of projects focusing on good governance and building and strengthening administrative structures.

Indonesia is taking advantage of German consulting services (Federal Ministry for Economic Cooperation and Development/Deutsche Gesellschaft für Internationale Zusammenarbeit, GIZ), to help, among other things, implement its goal of reducing greenhouse gas emissions by 26 per cent (41 per cent with the help of development partners). The climate protection projects are being conducted on behalf of the Federal Ministry for Economic Cooperation and Development and, since 2008, the Federal Environment Ministry.

There are some 30 ongoing FC and TC projects employing approximately 70 long-term experts. In addition, there are 11 integrated experts seconded by the Centrum für internationale Migration und Entwicklung (CIM).

Scientific and technological cooperation

Indonesia is also one of the priority countries in scientific and technological cooperation with Asia.

A bilateral agreement on cooperation in science and technology was concluded between Germany and Indonesia in 1979 and cooperation in this area has since been successful and trustful. Also of importance here is the German Federal Government’s 2008 decision to step up international cooperation in research and technology, with a special focus on Asia and Indonesia. There are a wide variety of cooperation areas, which are being constantly expanded.

The biggest project in recent years was the construction of a tsunami early-warning system, on which an agreement was concluded in the wake of the 2004 tsunami. Germany provided some EUR 53 million in funding for this purpose. A large number of institutions on both sides are involved in the project, the German side being headed by the German Research Centre for Geosciences in Potsdam and the Indonesian side by the Indonesian Agency for Meteorology, Climatology and Geophysics. Construction of the system is largely completed; its final handover to the Indonesian authorities took place in March 2011. There is, however, a follow-up project entitled PROTECTS that focuses on capacity-building measures and efforts to ensure the system’s sustainability.

Another priority area of bilateral cooperation is Indonesia’s proposed construction of a National Innovation System. The German side provided assistance here a number of years ago by presenting a study on Indonesia’s research and technology landscape. Implementation of the proposals contained in this study constitutes an integral part of the planned National Innovation System. To this end, ties between the business and research communities in Indonesia are to be strengthened, which is why the German side is helping to build Business Technology Centres by seconding CIM experts.

In April 2010, and agreement on geothermal research was concluded between the two countries’ research and technology ministries. It provides for joint projects in areas including exploration, drilling technology, sustainable use of resources and safety issues. The German side is making as much as EUR 9 million available for this purpose. Work has begun on the construction of a binary cycle geothermal power plant in North Sulawesi.

In the area of biotechnology, the successful work is continuing but is to be extended to include cooperation between German and Indonesian research collections on biodiversity. Indonesia offers an inexhaustible wealth of biodiversity. Planning for a new German Research Foundation (DFG) special research area on the ecological and socio-economic function of tropical forests and the analysis of monocultures is complete. The special research area focusing on Jambi, Sumatra commences work with an opening workshop in June 2012.

The long-standing cooperation in marine research is to be continued in September 2012 by the launch of the SPICE III project. Research here focuses on marine biodiversity, climate change and coral reef and mangrove ecology.

Thanks to the lively academic exchange between the two countries, under which some 25,000 Indonesian scientists and engineers have received training in Germany since the founding of the Republic of Indonesia, it has proved possible to constantly expand and intensify cooperation. Indonesia’s scientific elites include a number of graduates of German universities, many of whom studied on scholarships funded by the German Academic Exchange Service (DAAD).

Cooperation in culture and education

Indonesia and Germany also have long-standing relations in the cultural sector, which date back to the many Germans that lived in former Dutch India. In the 19th century, Indonesia played a conspicuous role in Germany’s literary and art scene. For instance, the Indonesian painter Raden Saleh (1807-1880) was a formative influence on Dresden’s Late Romanticism. Indonesia featured in the works of German writers like Theodor Fontane (1819-1898) and Hermann Hesse (1877-1962). The Prussian geographer Franz-Wilhelm Junghuhn is described as the ‘Humboldt of Java’. And the German painter and musician Walter Spies (1895-1942) settled on the island of Bali and strongly influenced local art and music. Today, there are many partners continuing this tradition of close relations, chief among them the Goethe Institute, which has offices in Jakarta, Bandung and Surabaya.

Indonesia’s close relations with Germany are also evident in the education sector. Some 30,000 Indonesians studied in the Federal Republic of Germany after Indonesia gained independence. There are a total of more than 150,000 Indonesians learning German at schools alone, though German as a foreign language faces growing competition from Mandarin and Japanese.

Twenty-eight partner schools in Indonesia, with some 15,000 German learners (including the German International School), are members of the Federal Foreign Office’s ‘Schools: Partners for the Future’ initiative (PASCH), which was launched in 2008. The PASCH initiative is designed to promote the education and (further) training of teachers and pupils with a view to enhancing educational opportunities and providing a tangible experience of Germany at schools abroad.

The DAAD and the Studienkolleg Indonesien (Indonesia University Preparatory School) in Jakarta offer young students and academics with an interest in Germany the opportunity to study at a German university or obtain advice on studying here. There are currently a total of around 2,500 Indonesians studying in Germany. There are some 2,500 students enrolled at the 13 German and German Studies departments in Indonesia, many of them being trained as German teachers.

Security and defence policy

Germany and Indonesia have agreed to step up cooperation on security and defence strategy, training, research and development and humanitarian assistance and disaster relief. The cooperation is to be given greater substance by the establishment of an Indonesian-German Defence Dialogue.