Indonesian – German Bilateral Relations

The most important pillar of Indonesian-German relations is not abstract, but it is the people who stimulate and bring to life a partnership – or even better – a friendship between Indonesia and Germany. As early as in the 16th century, Germans lived in Indonesia, explored the country and its people did a lot of trade with them. Today , there are Germans who take pleasure in living in Indonesia, working for more than 150 large and small scale companies, or as development experts, scientists and teachers. On the other side, there are all those Indonesians who in several ways feel close to Germany, particularly more than 2000 young Indonesians who are currently studying in Germany.

The relations between Indonesia and Germany have been guided from its early years until today by a spirit of goodwill, friendship as well as mutual respect and understanding. It is upon these basic tenets that the close cooperation between the two countries and peoples have developed over the years. The relations between the two nations have developed independently of the actual governments. They are created and sustained by the people. The most important topics of Indonesia-German relations may be found in the domain of politics and security; economic, trade and investment; development cooperation; as well as scientific research and culture. The Government of Germany has played an important role in the implementation of the Indonesian reform, by among others offering help in restructuring the Indonesian Central Bank, in strengthening small and medium scale enterprises and in promoting decentralisation.

Ever since the opening of diplomatic relations in 1953, the Indonesian-German bilateral relations have proceeded on positive and friendly terms. Indonesia sees Germany as an important partner both on a bilateral level and with regard to its relations with the European Union. This has been indicated among others by the exchange of visits at the levels of the Head of State/Government, ministerial and of senior officials as well as exchange visit among members of parliaments of both countries. President Megawati Soekarnoputri has met Chancellor Gerhard Schröder (SPD) in Johannesburg in September 2002 and upon invitation of President Megawati Soekarnoputri, Chancellor Gerhard Schröder on May 2003 together with numbers of high ranking officer, has made his state visit to Indonesia. It is a clear signed on the important of the two countries bilateral relations. To underscore this positive trend, the Minister of Economic and Labor of the Federal Republic of Germany, Wolfgang Clement and the Minister of Foreign Affairs of the Republic of Indonesia, Hassan Wirajuda have signed the Agreement on the Promotion and Reciprocal Protection of Investment, witnessed by President Megawati and Chancellor Gerhard Schröder. The Indonesian government earnestly hopes that this agreement will be instrumental in promoting future German’s investment to Indonesia.

The Government of Germany has consistently supported for the stability, territorial integrity and national unity of Indonesia, and welcomed the Indonesian government efforts to solve internal conflicts through dialogue and negotiation. In this context the German government welcomed the signing of the Aceh Cessation of Hostilities Agreement in Geneva on 9 December 2002 and contributed constructively in the Preparatory Conference on Peace and Reconstruction in Aceh, held on 3 December 2002 in Tokyo. During the period of transition to democracy in Indonesia, the German government has also rendered actively technical support for decentralization process, good governance and the drafting of national electoral and political party laws. Close bilateral cooperation between the two countries was further demonstrated by the involvement of Germany and Indonesia in a number of international fora like the United Nations as well as within the framework of ASEAN-EU dialogue and ASEM. Moreover, the heads of state of the two countries have assumed patronship of a research project to deepen the understanding between the Islamic and the Western cultures.Furthermore, to intensify dialog between two countries as well as to deepen understanding of their respective political aspirations, a caucus of friends of Indonesia at the Bundestag has been established since July 4th, 2003.

The cooperation between Indonesia and Germany in the military and security fields have been conducted over years focused on the procurement of military and security equipments. These relations expanded to include cooperation in training programmes. The procurement programme reached its peak with the purchase by the Indonesian Government of submarines and ex-GDR vessels. Cooperation in military training programme between Indonesia and Germany was initiated in May 1972 when two countries agreed on a mutual training support programme on an annual basis. However, military and security cooperation between Indonesia and Germany in recent years experienced a setback due to the linkage of military cooperation by the Government of Germany to the “code of conduct on arms sales” (EU) and the level of promotion and protection on the human rights as well as the 1998 crisis in Indonesia. The military cooperation regained its momentum with the progress of the reform programme in Indonesia, in particular of the internal reform of the Indonesian military. Concrete cooperation is yet to be undertaken in this field.

With regard to bilateral financial and technical cooperation, in December 12, 2002, the governments of Germany and Indonesia signed an agreement on deepening their long standing development cooperation in the areas of economic reform, health, transport, and decentralisation. The total of 28.5 million Euro (almost equal to 28.5 million US$) has been made available by the German Government for a number of financial and technical co-operation projects in Indonesia. This amount was topped by another 1.5 million Euro special funds from the German Government´s "Programme of Action 2015” on poverty reduction. The financial and technical cooperation is indeed instrumental in revitalizing the Indonesian economy, particularly in helping its economic restructuring.

On October 2, 2002, the representatives of the Government of the Republic of Indonesia and of the Federal Republic of Germany signed the Basic Agreement for the second German Debt Swap Program amounting to Euro 23 million for which projects still have to be identified. In December 3, 2002, for the first time, the “Debt Swap for Education” was signed by the representatives of the two governments. The German Government will cancel Euro 25.6 million of Indonesian debts if 50% of that amount will be invested by the Indonesian Government in a project for education. The first German Debt Swap for Education shall start by early 2003, thus becoming the first and the most concrete debt swap program granted to Indonesia by one of the members of the Paris Club.

Bilateral investment cooperation between the two countries grew steadily over the years since the signing of the Investment Guarantee Agreement in 1953 until it suffered a substantial setback due to the economic and monetary crisis which hit Indonesia in 1997. The total value of German investments in Indonesia from 1967 until 2001 reached US$ 9,204,355,000.00 for 216 projects. After topping a total of US$ 959.5 millions for 28 projects German investments in Indonesia declined rapidly to US$ 42.6 millions in 2001 for 32 projects which included among others chemical and pharmaceutical industries, metal and other heavy industries, trade, communications, services, hotels and restaurants. While German investments in Indonesia ranked fourth among ASEAN member countries in 2000, it fell to sixth in 2001. This downward trend continues until today due to the slowdown of Germany’s economy and to the non-conducive investment climate in Indonesia and the Bali bombing, prompting German entrepreneurs to adopt a wait-and-see attitude. However, they are still waiting to take up the challenge to invest in Indonesia, appreciating the growth political stability and economy potential of the country.

Statistical figures on bilateral cooperation in tourism showed steady development until the Bali tragedy. The number of German tourists visiting Indonesia in 2001 reached 159,881, thus comprising the second largest group among tourists from European countries after Great Britain. German tourists are highly valued in Indonesia in view of their volume of average spending amounting to US$ 80-100 per day and their average overnight-stays of 15 days. In the year 2002, the number of German visitors declined substantially into 79.919 persons due to the Bali bombing on 12 October 2002 and the travel advisory subsequently issued by the German Federal Foreign Office. However, it is heartening to note that the tourist situation has picked up its momentum lately due to rescue, rehabilitation and normalization measures by the Indonesian Government as well as the lifting of the travel warning by the Federal Ministry of Foreign Affairs.

Bilateral trade between the two countries has grown steadily over the years. Two-way trade grew to more than US$ 3.73 billion in the year 2002. German exports to Indonesia reached US$ 1.43 billion, an increase of 7.5% from previous year. On the other hand, German imports from Indonesia totalled US$ 2.3 billion, a decline of 5%. Major German exports to Indonesia include machinery, machine tools, vehicles, telecommunication equipments, electrical equipments, chemicals, generators, dyestuff, steel, and pharmaceuticals. Indonesia’s commodities importing into Germany include textile and garment, furniture and wood products, palm oil, coffee, tea, tobacco, cocoa, footwear, rubber products, pulp and paper, marine products, electronics and electrical components. Indonesia maintains a continuation of changes in its trade policies towards more open domestic market and offers export potentials to its trading partners. In the meantime, Indonesia is making serious efforts to boost export of non-oil and gas products, particularly manufactured products, by creating a national-level task force on promoting Indonesian export.

With regard to bilateral cooperation in education, there was an increase in 2002 with the benchmark programme through networking with several institutional German organizations, including (i) in the higher education fields of sport science and agricultural technology and German cooperation efforts with several universities in Indonesia supported by DAAD; (ii) vocational education with increasing cooperation in standardization of certification of exchange programme of specialists to Indonesia (in cooperation with the Directorate General of Basic and Middle Educations, Indonesian Ministry of National Education) and exchange programme for Indonesian instruction specialists to Germany (BIBB/INWENT). In 2002, cooperation in the cultural field experienced an upturn with cooperation programmes with several German cultural institutions, as demonstrated by the sister-school cooperation programme between the 10th State Specialized High School in Bandung and the Lilibraun Gymnasium in Berlin, Gautz Gymnasium in Braunschweig and the Ruperti Gymnasium in Mühldorf near Munich. Some Indonesian students in 2002 have conducted programmes that have been proposed by some formal institutions in Jakarta, including (i) the Indonesian Specialists and Scientists Union in Hamburg conducted a one-day seminar titled “Marine Exploration Resources”, (ii) the Indonesian Discussion Forum in Berlin in cooperation with the Institute for Science and Technology Studies and the Berlin International Business Council conducted an ISSM-seminar titled “Empowerment of Indonesian Small and Medium Enterprises through Environment-oriented Technologies”. Educational and cultural cooperation is further supported by federal executive agencies (DAAD, DSE, INWENT, etc.) as well as by private organizations/institutions closely associated with Indonesia.