Indonesia ups trade with Somalia

By Terry Lacey

(January 31, Jakarta, Sri Lanka Guardian) While Indonesian Foreign Minister Marty Natalegawa leads a delegation to the London talks on Afghanistan, Indonesian Trade Minister Mari Elka Pangestu has just signed an agreement to increase Indonesian trade with Somalia. Both moves reflect the policy of the new five-year Government led by President Susilo Bambang Yudhoyono. That Indonesia must go global, and take a lead in the Muslim world.

The Indonesian delegation in London just held a bilateral meeting with US Secretary of State Hillary Clinton. President Barack Obama as well as British Prime Minister Gordon Brown, are pushing for Indonesia to play a bigger role in Afghanistan and on the global stage, and Obama once lived in Jakarta !

But for the US and UK, soon to have 100,000 and 10,000 troops respectively in Afghanistan, it is painfully obvious to US Central Command General David Petraeus, and Pentagon Chief Robert Gates that negotiations with the Taliban and the need for soft-power solutions, backed by hard-power, are the order of the day.

In the global Muslim hot-spots of Afghanistan, Pakistan, Yemen and Somalia, the battle for development is the only battle that can be, and has to be winnable, and there are no military solutions.

Indonesia-Somalia trade slumped from $8 millions in 2008 to $1.5 millions in 2009. Indonesian Trade Minister Mari Pangestu said “This year, we can rebound back to $8 million as the direct trading will contribute to this.”

Somali Ambassador Mohamud Olow Barrow said, “Even though Somalia´s population is only 9.8 million the total number of Indonesian sarongs being exported to Somalia via Dubai is 20 million pieces per year”.

Indonesia has now decided to boost textile exports to Somalia through direct trade, instead of via Dubai, and to push its increasingly global construction companies into the reconstruction of war-torn Somalia.

Indonesian state-backed construction companies like Adhi Karya, Waskita Karya and Wijaya Karya, are increasingly active in the Gulf, Saudi Arabia, Libya, Morocco and Algeria.

Somali Trade Minister Abdirashid Mohamed Abdi said, “With many of our construction experts working abroad due to the instabilities that our country has been experiencing, we will require support from Indonesia, which is why construction materials that Indonesia exports will be given a 0 percent tariff rate.” (The Jakarta Globe, 19.01.10).

Juniman, an economist at PT Bank Internasional Indonesia praised the Yudhoyono government for its efforts to penetrate new markets in East Africa but warned about security issues, especially maritime piracy.

But there is a thread of logic in an emerging Indonesian foreign and trade policy that will engage non-traditional markets and use the Indonesian comparative advantage arising from its status in and commitment to the Organization of Islamic Congress.

The fact is that the biggest majority-Muslim nation in the world is on the move and its sheer economic weight, as potentially the seventh largest economy in the world by 2040, could make it increasingly significant in the deployment of the soft power needed to consolidate global Muslim modernization across the diversity of the ummah – the global Muslim community.

And if that were to mean that an Indonesian frigate should join the multilateral force on pirate patrol off the coast of Somalia, or that Indonesian troops might eventually end up as UN blue-helmet peace keepers in Afghanistan, Somalia or Yemen, alongside Turkish or Jordanian troops, then that would be no bad thing.

Better the West pay for the blue helmets and equipment that are needed, than set itself up as the target and recruiting agent for extremists.

If World Bank economist Timothy Bulman is right, Indonesia could soon be galloping along with growth rates reminiscent of those during the Soeharto era, at 7 or 8 percent growth a year. “The real economy has returned back to solid growth”, he told a seminar of the Institute for Development of Economics and Finance. (The Jakarta Post, 29.01.10).

Time to use the growing economic weight of Indonesia, with its 230 million people, to help make progress in the Arab and Muslim world.

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.