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Indonesia

Indonesia

Last updated in March 2014

Political Relations

Indonesia and Germany have traditionally enjoyed intensive and wide-ranging relations. In recent years, there has been a further increase in mutual interest. As the largest members of the European Union and the Association of Southeast Asian Nations (ASEAN), respectively, Germany and Indonesia take similar positions on many issues relating to the development of the two regional organisations.

Despite its good reputation in Indonesia, Germany faces regional and global “competition” in its efforts to step up bilateral relations with Southeast Asia’s largest country and an up-and-coming player in the political arena. In recent years, senior-level political contacts between Germany and Indonesia have markedly intensified. During his term in office, Federal President Christian Wulff paid an official visit to Indonesia (in late 2011). Federal Chancellor Angela Merkel visited Jakarta in July 2012 and Indonesian President Susilo Bambang Yudhoyono paid an official visit to Berlin from 3 to 6 March 2013. Relations have been further cemented by several ministerial-level visits to Indonesia, including that by Federal Minister for Economic Cooperation and Development Dirk Niebel in January 2013 and, most recently, the visit by Federal Foreign Minister Guido Westerwelle from 10 to 12 February 2013. In addition, the Jakarta Declaration agreed upon during Federal Chancellor Merkel’s official visit to Indonesia in July 2012 represents a thematically wide-ranging fundamental agreement between Germany and Indonesia to continue and step up their close and multi-faceted cooperation in the coming years.

The list of mutual visits by parliamentarians includes: in 2011, visits to Indonesia by German Bundestag Member Volker Kauder and German Bundestag Vice-President Wolfgang Thierse, as well as by delegations of various Bundestag committees;  and in 2012, several visits to Germany for talks by Indonesian members of parliament, including participants in the German Bundestag’s and the Federal Government’s official guest programme, who travelled to Berlin, Schwerin and Wismar to gather information on legal and practical issues relating to German federalism. In July 2012, Parliamentary State Secretary at the Federal Ministry of Transport Jan Mücke and German Bundestag member Petra Müller held numerous high-level talks in Jakarta and Surabaya on the issues of transport and urban development. Indonesia’s Minister of Public Works paid a return visit to Berlin and Dresden in October 2012. More recent visits to Indonesia were those by German Bundestag members Mißfelder and Ruck in summer 2013.

Two international trade fairs, the ITB in Berlin in March 2013 and the BAUMA in Munich in April 2013, gave a considerable boost to economic relations; Indonesia was the partner country at both events.

Indonesians have not forgotten Germans’ compassion and willingness to help in the aftermath of the tsunami disaster in Aceh in late 2004. The help provided by Germany following the 2009 earthquake was also well received.

Germany supports the Indonesian government’s ongoing reform efforts with a wide range of projects designed to ensure good governance and strengthen administrative structures.

As the country with the world’s largest Muslim population, Indonesia is a major partner of Germany in dialogue on religious issues. In April 2013, the third German-Indonesian Interfaith and Intercultural Dialogue between representatives of the two countries’ governments and numerous civil-society organisations and religious communities was held in Manado in the Indonesian province of North Sulawesi.

A wide-ranging series of events entitled “JERIN – Jerman dan Indonesia” was held to celebrate the 60th anniversary of the establishment of diplomatic relations between the two countries. Lasting from October 2011 to June 2012 and featuring some 120 public events in more than 15 Indonesian cities, JERIN showcased the breadth of Germany’s engagement in Indonesia. In view of its overwhelming success, JERIN was continued in 2013 as a platform for bilateral relations in the political, cultural, scientific, academic and economic spheres.

Economic relations

There are currently more than 300 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 more than 500 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 organisations from Indonesia and Europe (www.indonesien.ahk.de).

As Germany’s official business promotion agency, Germany Trade & Invest (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.

Other German institutions active in Indonesia are the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ), the KfW Development Bank and the Deutsche Investitions- und Entwicklungsgesellschaft (DEG), which is a KfW subsidiary.

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

In recent years, several German Bundestag delegations as well as delegations from Germany’s federal and regional ministries have travelled to Indonesia for talks on economic policy and other policy areas with the relevant institutions, authorities and businesses in Indonesia. The highlight in bilateral relations in 2012 was the visit to Indonesia by Federal Chancellor Merkel, who was accompanied by a business delegation.

German-Indonesian trade

In 2013, the value of Indonesian trade with Germany declined slightly. Indonesian exports to Germany shrank by approximately 10 per cent, to EUR 3.5 billion. Indonesia’s main exports to Germany are food and animal feedstuffs (in particular vegetable oils and fats), textiles, agricultural produce, electronic devices, footwear and ores.

Indonesian imports from Germany fell slightly, by approximately 2.5 per cent, to EUR 3.1 billion. The country’s main imports from Germany are machinery, primary and finished chemical products, communications technology, electricity generation and distribution equipment, electronic components, metals, motor vehicles and pharmaceutical products.  (The sometimes significant discrepancies between German and Indonesian trade figures are probably due in part to the Rotterdam and Singapore effects. According to Indonesian figures, the country actually records a balance-of-trade deficit with Germany.)

German companies’ engagement in Indonesia

The severe recession suffered by the Indonesian economy in 1997/98 barely affected the presence of German companies there. 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 Thyssen Krupp and, in the chemical sector, BASF, Bayer, Beiersdorf, Merck, Henkel, Evonik and Südchemie. Other major companies operating there are Allianz AG and Deutsche Bank in the finance and insurance sector, DHL, Schenker and Hapag-Llyod in the logistics sector and HeidelbergCement, Fuchs Oil and Schott AG. Daimler/Mercedes-Benz and BMW carry out final assembly of cars in Indonesia and are keen to expand their production there.

Companies like Siemens AG (which manufactures steam turbines in Bandung), KSB, Festo and Bosch have expanded their activities in Indonesia and LINDE AG and Ferrostaal AG plan to do so in their respective business sectors.

The German-Indonesian Chamber of Industry and Commerce (EKONID) has registered increased interest in the Indonesian market on the part of German companies. The Indonesia Investment Coordinating Board puts realised German direct investment in Indonesia at around USD 76 million; the Deutsche Bundesbank, Germany’s Federal Bank, puts the figure at EUR 187 million. Total EU investment in Indonesia was worth EUR 2.5 billion.

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: climate change and sustainable development, private sector promotion and good governance. Germany provides funding worth approximately EUR 3.4 billion, making it Indonesia’s fourth largest bilateral development cooperation partner, after Japan, Australia and the United States. Germany provides substantial support for development programmes in Indonesia through multilateral institutions such as the United Nations, the Global Fund to Fight AIDS, Tuberculosis and Malaria, the World Bank, the Asian Development Bank and the European Union budget.

In 2012, a total of EUR 20 million was disbursed under Financial Cooperation and EUR 24 million under Technical Cooperation.

Professional chambers and government agencies are helping to establish practice-oriented vocational training in teaching curricula, some training institutions receiving workshop and laboratory equipment. In its efforts to reform its labour market, Indonesia is drawing on the experience of Germany and other countries. Regional economic development is increasing the number of jobs outside urban centres and is benefiting from professional associations’ growing orientation towards the service sector.

With the help of German consultants, Indonesia’s Ministry of Administrative Reform and Bureaucratic Reform is developing job profiles to ensure transparency in personnel matters and the nationwide advertising of vacant leadership positions. Assistance is being provided to the National Agency for State Administration’s School of Public Administration as well as to an office for reporting attempted bribery and the acceptance of advantages.

The Federal Ministry for Economic Cooperation and Development and the Federal Environment Ministry are helping Indonesia to attain its climate protection goals. The funding of geothermal power plants is increasing the share of renewables in the country’s fast-growing electricity generation sector. However, plants of this kind require long lead times. Indonesia is one of the Earth’s three green lungs. Efforts are being made to ensure that in future forests and peat bogs continue to regulate the climate as natural carbon sinks. Other goals of the country’s comprehensive forest protection programme are preserving biodiversity and protecting water catchment areas. German development cooperation is funding the protection of biologically important coral reefs, in addition to the research cooperation outlined below. Environmental policy and climate protection funding are being consolidated through international expert advice.

Scientific and technological cooperation

Indonesia is also one of the priority countries in German cooperation with Asia in science and technology.

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 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 (BKMG). 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. These measures are scheduled to run until 2014.

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, an agreement on geothermal research was concluded between the Federal Ministry of Education and Research (BMBF) and Indonesia’s State Ministry of Research and Technology (RISTEK). 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 on the construction of a binary cycle geothermal power plant in North Sulawesi is in preparation.

In the area of biotechnology, work on biodiversity is continuing and is being extended to include cooperation between German and Indonesian research collections. Indonesia offers an inexhaustible wealth of biodiversity. In June 2013, the so-called White Paper laying out a joint strategy to identify medically relevant substances based on biodiversity was adopted by the BMBF and RISTEK. To begin with, joint project proposals are being developed. In the area of environmental research, the German Research Foundation’s (DFG) special research area on the ecological and socio-economic function of tropical forests and the analysis of monocultures, focusing on Jambi, Sumatra, commenced work with an opening workshop in June 2012.

The long-standing cooperation in marine research is continuing with 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 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 18,000 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 students 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.

Development cooperation

Indonesia is a partner country of German development cooperation. For more information please visit the website of the Federal Ministry for Economic Cooperation and Development

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