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          Home> Media Report
          Indonesia seeks Chinese investment
          Updated: 2010-07-09

          "Why should you buy coal from the Indians when you can do it directly from the Indonesians? The more middle-men you use in doing businesses, the more money you will lose. Isn't that true?"

          With a proven reserve of over 36 billion tons of coal, Indonesia is the biggest coal exporter in Southeast Asia. Eons of volcanic activities under the crust of the country have also endowed it with coveted amounts of petroleum, natural gas, aluminum, copper, nickel, tin, silver and gold.

          But China is not so skilled at getting its hands on these resources, according to Jauri.

          Mines, mines, mines

          "China is the richest country in the world in terms of the size of the foreign exchange reserves it holds, but Chinese businessmen seem more willing to buy minerals already dug out of the ground than go and buy those mines themselves," he said.

          "This is why for now, the majority of almost all big mines and wells from petroleum and gas to coal and gold in Indonesia are operated by either Americans or Europeans. If such circumstances continue, Chinese buyers would soon find that they are buying less resources from Indonesia at higher prices."

          "What you must control are mines, mines and mines, not the shipfuls of coal and iron ore leaving for foreign ports."

          Jauri said the increasing popularity of the Chinese yuan in South Asia is another favorable element for Chinese businessmen to speed up investment in Indonesia.

          "Settlements and clearing of businesses is very convenient now - as long as you have a letter of credit written out by the Jakarta branches of the Bank of China or the Industrial & Commercial Bank of China, every deal will be settled between yuan and local currency directly and clearly," he said.

          China now is the second biggest exporting market for Indonesia and also the biggest importer of Indonesian commodities excluding petroleum and natural gas.

          Last year, direct investment from China to Indonesia stood at $220 million, up 29 percent year on year, according to statistics from China's Ministry of Commerce.

          The opening of the China-Asean Free Trade Area, a market covering 11 nations and a population of 1.9 billion in South and Southeast Asia and China, since January 1 this year is widely believed to be another impetus to regional trade.

          China's heavyweights

          "My experiences told me that local people in Indonesia like to do business with Chinese, because Chinese at least do their business with money instead of aircraft carriers and guns, the preferred instruments of some old world powers," Jauri remarked.

          Jauri said he has already made initial successes in introducing China capital to Indonesia. The investors he has helped include both heavyweight Chinese State-owned firms and the SMEs.

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