There's anxiety in Indonesia if its coal export policy is really the best: Rizali Wilmar Indrakesuma

Interview with Indonesian ambassador to India

Indonesia’s move to amend its coal export norms has impacted India’s power sector. The two countries are also preparing to negotiate a free trade agreement. Rizali Wilmar Indrakesuma, the country’s ambassador to India, spoke to Sanjay Jog on these and related issues. Edited excerpts:

Coal importers and power companies in particular in India have expressed concerns over Indonesia’s new regulations, requiring all foreign mining companies to sell majority stakes in their operations to locals by the 10th year of production.
See the issue from the perspective of Indonesia’s current efforts to reassess and find a balance between our own needs and our capacity. It also relates to our potential in exporting coal, while exploring the possibility of extracting more from the products. The government now feels the need for some sort of a restraint in exporting our coal. We really do not see a full stop to exports but at a more regulated pace and with more clarity on the modalities of export.

There is also anxiety on whether it is really the best coal export policy or there should be regulation on the export of a particular quality or class or percentage. By the same token, we are also attempting to look at the possibilities of exports from the point of view of value addition.

Have any talks been held at government levels to relook at the regulations?
Formally, I am not aware of such talks. I do get feedback and concerns informally from some of our Indian counterparts.  I can only say that  Indian importers need to also have a comprehensive awareness of the whole rationale behind these new regulations. This is where constant dialogue and communication would play a major role.

How are India and Indonesia positioned to  extend their ties for growth of trade and investment?
Bilateral relations and economic cooperation between India and Indonesia were neglected in the 1960s, 70s, 80s, 90s. Nothing really significant had happened. Of course, the relations have always been cordial but that was about it. During that past, our relations were lukewarm. Only at the beginning of this century did our leaders apparently realise that we need each other to make use of the situation, to make use of this globalisation and to make use of these abundances between countries. Only since then were steps taken to exploit the potential of our bilateral relations.

In a way, that has already been proved. Since 2005, after signing the strategic partnership agreement between the leaders of our two countries, tangible results began to emerge almost immediately. A case in point is our trade. In 2005, two-way trade was around $5 billion. The two trade ministers set a target of $10 bn in 2010 and it was achieved in 2009. That indicated how the potential between our countries could further be harnessed. In 2011, the trade rose to $18 bn but decreased in 2012 due to the global economic slowdown. Still, we have set a new target of $25 bn by 2015.

Are India and Indonesia mulling a free trade agreement?
It is in the making. Both countries have arrived at a consensus to enter into a Comprehensive Economic Cooperation Agreement. It started with a joint study group. This group produced a document,  endorsed by both governments, on how to proceed with further negotiations.

We hope to start negotiations at the start of the second half of this year. We are optimistic, since we know the possible areas of cooperation and the possible difficulties. The objective is to protect the interests of our respective countries but, at the same time, promote economic cooperation.

What are the key areas in focus?
Indonesia provides coal, palm oil and rubber to India but we need to go further. India is exporting textiles, automotive products. We are also expecting investments from Indian companies in the automotive industry sector. TVS is already there; there is talk about Tata  exploring further investments. I have even heard about the possibilities of the Nano (car) being produced in Indonesia because the level of consumption of motor cars is increasing in our country. However, no concrete plans have emerged.

The close economic cooperation could also be reflected in both our capacities as member-countries of the G20 and East Asian Summit. Our GDP puts us both in the $1-trillion club.

How are India and Indonesia organised to fight global terrorism?
It is agreed by both countries that face the same threat of terrorism. Even our perception of threats are somewhat similar. The strategic partnership agreement includes cooperation in fighting against terrorism. A Joint Working Group on Counter-Terrorism has already been established. The first meeting was held in Indonesia in 2011 and we are planning to have a second meeting in Delhi in the current year. The working group consists of senior officials from the agencies concerned of both countries.