Last updated in March 2016
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.
The visit to Jakarta by Federal Foreign Minister Frank-Walter Steinmeier in early November 2014 testified to the quality of bilateral relations. Taking place just a few days after the inauguration of Indonesia’s new President Joko Widodo and the appointment of the new government, the visit offered the opportunity to gain first-hand information about the government’s plans in talks with the President and Foreign Minister Retno Marsudi and to jointly put this in the context of the two countries’ wide-ranging relations. The Federal Foreign Minister was accompanied by German Bundestag Vice-President Petra Pau and two other Bundestag members, enabling an exchange of ideas with representatives of Indonesia’s new parliament. Steinmeier was also accompanied by a high-ranking business delegation and numerous special guests. A first meeting between President Widodo and Federal Chancellor Merkel took place in November 2014 on the sidelines of the G20 Summit in Brisbane.
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 those by Federal Minister for Economic Cooperation and Development Dirk Niebel in January 2013 and Federal Foreign Minister Guido Westerwelle in February 2013. 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.
Exchange between the Indonesian parliament and the German Bundestag has intensified in recent years. German Bundestag President Norbert Lammert visited Jakarta in March 2015. In August 2015, Indonesia hosted a visit by members of the German Bundestag’s Committee on Labour and Social Affairs.
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. The Federal Government Commissioner for Human Rights Policy and Humanitarian Aid, Christoph Strässer, visited Jakarta and Papua Province in September 2015.
As the country with the world’s largest Muslim population, Indonesia is a major partner of Germany in dialogue on religious issues. The fourth German-Indonesian Interfaith and Intercultural Dialogue between representatives of the two countries’ governments and numerous civil-society organisations and religious communities was held in September 2015 in Berlin.
There are currently some 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 seeking to expand their business activities to the German market and assists German companies seeking to enter the Indonesian market by providing foreign trade information. The GTAI website offers free access to extensive information on various business sectors of particular interest to German companies (external link, opens in new windowwww.gtai.de).
The German Centre Indonesia (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 with country offices 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.
German business delegations frequently visit Jakarta. Most of these trips are made by specialised sector-specific delegations (e.g. packaging industry, medical technology, marine technology) or by delegations accompanying high-ranking political visitors. The highlight in 2012 was the visit to Indonesia by Federal Chancellor Merkel, who was accompanied by a business delegation. The most recent visit was that by Federal Foreign Minister Steinmeier, who travelled to Jakarta in November 2014, also accompanied by a large business delegation.
In 2015, Indonesia’s foreign trade (total imports and exports of goods) declined for the fourth consecutive year. According to Statistics Indonesia figures, exports fell by 15 per cent, to USD 150 billion, and imports slumped even more, by nearly 20 per cent to around USD 143 billion. In 2015, German exports to Indonesia shrank by 15 per cent compared with the previous year, to USD 3.5 billion, Germany thus remaining in ninth place among the country’s principal suppliers of goods. Germany’s main exports to Indonesia are special machinery and motor vehicles (including components and parts).
However, the downward trend does appear to have bottomed out. Nearly all forecasts are unanimous in predicting a reversal of the trend for Indonesia in 2016.
German companies’ engagement in Indonesia
The severe recession suffered by the Indonesian economy in 1997 and 1998 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 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 and Evonik. Other major companies operating there are Allianz AG and Deutsche Bank in the finance and insurance sector, DHL, Schenker and Hapag-Lloyd in the logistics sector and HeidelbergCement, Fuchs Oil and Schott AG. Daimler/Mercedes-Benz and BMW carry out final assembly of cars in Indonesia.
Companies like Siemens AG, KSB, Festo and Bosch have expanded their activities in Indonesia and LINDE AG, Fresenius and Ferrostaal AG plan to do so in their respective business sectors.
In 2015, German direct investment in Indonesia was worth USD 57 million. With total foreign investment standing at USD 29.3 billion, Germany’s share was a modest 0.2 per cent.
If Ferrostaal’s plans to build a petrochemical plant in Papua take more concrete form, the project (worth more than USD 1 billion) would be the biggest German investment ever made in Indonesia. Good progress has been made on the project recently.
Indonesia is one of the global partners of German development cooperation. German-Indonesian cooperation began as early as the 1950s and Germany is Indonesia’s fourth largest bilateral development cooperation partner, after Japan, Australia and the United States. In addition, 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. Germany also funds the work of non-governmental organisations and regional programmes in the context of ASEAN.
The priority areas of bilateral development cooperation are:
- Energy and Climate Change
- Sustainable Economic Development for Pro-Poor Growth
- Good Governance and Global Networks
The designated areas reflect the two countries’ shared political priorities and new developments in cooperation. Since 2007, the Federal Government has pledged some EUR 1.3 billion in development cooperation, a large portion of it in the form of low-interest loans to take account of the country’s level of development.
Energy and Climate Change
The strategic partnership agreed on with Indonesia in this priority area is designed to help protect the climate as a global public good. It encompasses the following areas:
- emission reduction by expanding the use of renewable energy
- emission reduction in cities
- emission reduction in forestry
- climate policy
Sustainable Economic Development for Pro-Poor Growth
German engagement in this priority area is designed to help the Indonesian government promote the country’s economic development based on ecological sustainability and pro-poor growth. It encompasses the following areas:
- improving the investment climate and promoting the ecologically sustainable development of value-added chains
- promoting demand-driven vocational training
- social security
Good Governance and Global Networks
German engagement in this priority area is principally concerned with helping the Indonesian administration to implement reforms aimed at the transparent and efficient provision of public services. It encompasses the following areas:
- bureaucratic reform
- combating corruption
- global processes (supporting Indonesia as an important actor in global forums (G20, post-Busan, post-2015)
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, including 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 (GFZ) in Potsdam and the Indonesian side by the Indonesian Agency for Meteorology, Climatology and Geophysics (BKMG). Construction of the system is completed; it was handed over to the Indonesian authorities in March 2011. The follow-up project PROTECTS, which also included capacity-building measures and efforts to ensure the system’s sustainability, was concluded at the end of March 2014. The BMKG has tasked a German consortium with the job of providing continued services for the system in cooperation with the GFZ.
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 newly emerging National Innovation System. To this end, efforts are to be made to strengthen ties between the business and scientific communities in Indonesia as well. The German side has helped to build Business Technology Centres by seconding a CIM expert. The work was completed in 2014.
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. Its installation is to begin in early 2015.
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. Eight project proposals have since been submitted and funding could begin in 2015. 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, but it is being expanded by a separate agreement with Indonesia’s Ministry of Marine Affairs and Fisheries. The Science for Indonesia Marine Ecosystems and Fisheries (SIMEF) agreement was signed in November 2014. 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 19,000 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. In the past four years, the number of Indonesian students in Germany has increased by more than 30 per cent to 3,636, making Germany the most popular study destination for Indonesian in Europe. 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.
From September to December 2015, the German Embassy in Jakarta, the Goethe Institute Jakarta and the German-Indonesian Chamber of Industry and Commerce (EKONID) organised the German Season in Indonesia under the motto Germany – Indonesia: Together Towards the Future. More than 100,000 visitors from Jakarta and the regional metropolises Bandung, Medan and Surabaya took advantage of the wide range of jointly organised events on culture, politics, business, science and research. Indonesia’s appearance as Guest of Honour at the 2015 Frankfurt Book Fair served to give interested German and international visitors a better understanding of Indonesian literature and culture.
Security and defence policy
There are contacts between the two countries’ armed forces as part of cooperation in the UNIFIL Maritime Task Force (MTF) and the annual bilateral Military Training Assistance programme. Three Indonesian staff officers are currently attending the International General/Admiral Staff Officer Course (LGAI) at the Führungsakademie der Bundeswehr. Other training courses are held in Germany for unit commanders, language trainers and computer scientists. As part of the annual bilateral programme, 14 joint measures are planned for 2016, the focus being on UN training and the medical corps.