Indonesia –Qatar closer economic links

By Terry Lacey

(May 20, Jakarta, Sri Lanka Guardian) The Emir of Qatar, Sheikh Hamad bin Khalifa al-Thani, arrived in Jakarta with a large delegation, to discuss economic links. Indonesia is in transition to a new coalition government probably to be led by incumbent President Susilo Bambang Yudhoyono and his Democratic Party, predicted by opinion polls to cruise to victory in upcoming elections on July 8th, along with a coalition of four Islamic parties.

Indonesian Presidential spokesman Dino Patti Djalal confirmed Jakarta Monday 18 there would be 12 Ministers on the high-level Qatari delegation. (Jakarta Post 19.05.09). “The close relationship is marked by two-way visits between the leaders and senior officials from each nation. These official visits have significantly boosted our bilateral relations.”

The two countries signed an Investment Promotion and Protection Agreement in 2000, a Double-Tax Avoidance of Agreement in 2007 and will now sign an MoU on economic and technical co-operation.

There will be a strategic meeting between Qatari and Indonesian investors in Jakarta on 18 and 19 May and the main possibilities for joint ventures are in mining, infrastructure (including energy) and plantations.

Indonesia with a population of 235 million, an estimated GDP (purchasing power) of US$908 billion, and GDP per head of $3,986, with economic growth of 4.5 percent, is a major investment destination for Qatar.

A $1 billion joint venture fund is being finalized between Qatari and Indonesian businessmen, 85 percent financed by Qatar and 15 percent by Indonesian capital, backed by the Qatar Investment Authority (QIA). Indonesian Ambassador to Qatar HE Rozy Munir reported the preparations to set up the joint fund in Qatar in mid April (The Peninsular and Qatar Tribune 14.04.09).

Qatar with a population of only 1.5 million and a GDP by purchasing power of $94 billion has an estimated GDP per head of $85,867. It is therefore a major source of liquidity, some of which could be deployed in Indonesia and ASEAN countries.

Both countries, despite their different relative sizes, are increasingly heavy hitters in regional and international forums, and both favor change in the international economic system and are pragmatic and independent-minded on Middle East issues, sharing concerns about the Gaza war and its aftermath.

Both countries are members of the Non-Aligned Movement and of the Organization of Islamic States. Qatar has taken a more independent minded and dynamic view of the Middle East dispute and hosted a key Summit Meeting in Doha in March to try and push for progress after the Gaza war.

Qatar has shown it can pack a political punch in the Middle East out of all proportion to its size, by backing its popular Al Jazeera TV station and taking an interest in problems in Lebanon, Yemen, Sudan and Somalia.

Qatar has also taken a more pragmatic and pushy position on the Israel-Palestine dispute, opening up links to Israel prior to the Gaza war, then pulling back from them in protest, and taking a more even-handed approach to Hamas.

Qatar has also attempted to build bridges between the more radical Middle Eastern powers such as Syria, Iran and Libya and the more conservative states such as Saudi Arabia, Egypt and Jordan.

Qatar lined up with Saudi Arabia, across the supposed radical-conservative divide after the Western-backed summit in Egypt to try to plan post-war aid to Gaza, when both preferred to push their economic support into Gaza directly and to reach an accommodation with the Gaza government.

Indonesia currently pursues an even-handed approach across the Middle Eastern political fault-line and is developing its economic and investment links with Saudi Arabia, the Gulf States and Jordan on the one hand, whilst expanding its energy and investment and trade links with Qatar, Libya, Syria and Iran.

The visit of the influential Emir of Qatar at this time is a feather in the cap of President Susilo Bambang Yudhoyono of Indonesia, proving that economic success is likely to bring more of the same.

Terry Lacey is a development economist who writes from Jakarta on modernization in the Muslim world, investment and trade relations with the EU and Islamic banking.

-Sri Lanka Guardian