OVERVIEW OF INDONESIA-THAILAND

ECONOMIC RELATIONS

By: Nana YulianaHead of Economic Affairs

The Embassy of the Republic of Indonesia in Bangkok

Since 8th century, Sriwijaya Kingdom-King Rama V had their tied relationship and visited each other followed by King Rama VII

Angklung was brought from Indonesia by King Rama VII in 1916

Indonesia-Thailand diplomatic relations started in March 1950

Since the opening of diplomatic relations, both countries’ Head of States have good relations

Historical perspective

Strengthened by ASEAN, Asia Cooperation Dialogue (ACD), New Asia-Africa Strategic Partnership (NAASP), APEC, and recently with G-20 and other forums

Foundation of bilateral relations:

G to G/G to B/G to P B to B P to P including U to U Multi-track diplomacy

3 TIERS APPROACH

In building the relationship between Indonesia-Thailand in the framework of

ASEAN Community 2015

Joint Commission on Bilateral Cooperation between Indonesia-Thailand

Areas to be discussed:

Political and security (High Level Committee in 2007)

Economy and trade (Trade Agreement 2009) Education (Rector Forum since 2005) Agriculture (Working group on agriculture) Fisheries (Working group on fisheries) Energy (Energy Forum 2007) etc

Mechanism of bilateral relations

Indonesia and Thailand enjoy strong and mutually beneficial economic relations

Bilateral trade between the two countries is steadily growing and has reached a total value of US$ 9.9 billion in 2008

On average, bilateral trade has significantly increased 21% over the last five years.

Indonesia-Thailand economic relations

The process of a bilateral trade agreement between Indonesia and Thailand has been concluded.

The agreement would facilitate private sectors from Thailand and Indonesia to tap on each other’s potentials in the interest of promoting trade and investment between the two countries.

In this regard, there is a need to request Thai government to expedite the agreement from Thai parliament.

  Thailand has enjoyed a trade surplus with Indonesia

of approximately US$ 2.6 billion

For the last three years, Thailand has also enjoyed a trade surplus of US$ 1.2 billion (in 2005), US$281 million (in 2006) and US$1.2 billion (in 2007)

However, it is noted that in September 2009 Indonesia enjoyed its trade surplus around US$ 62.7 million

It is common hope that despite the financial global crisis the two countries can enhance their trade cooperation

Export Indonesia to Thailand such as polywood, , chemical wood pulp, cacao, paper, paper board, copper, garments, electrical components, coal, motor vehicles spare parts, etc.

Export Thailand to Indonesia such as garment, food product, car vehicles, etc.

 Fuel Security

Indonesia and Thailand share similar views on the need to develop ethanol and biodiesel as alternative energy sources. Indonesia proposes to enhance cooperation with Thailand in developing alternative energy sources. Currently, Indonesia is the biggest palm oil exporter in the world.

3F Priorities of economic cooperation

The first Indonesia – Thailand Energy Forum was held in mid 2008 in Phuket. The forum was a milestone in expanding bilateral cooperation on non conventional energy such as electricity and renewable energy, coal and mining and biofuel.

The Second Forum will be held in Indonesia in 2010.

Indonesia and Thailand are two neighboring countries blessed with abundant fishery and marine resources.The two countries have a common concern over the problem of illegal fishing.

The Indonesian Embassy in Bangkok has established a new Task Force on Fishery in November 2008, that will open more windows of opportunity to bolster fishery cooperation between Indonesia and Thailand.

The Task Force functions to encourage joint venture between Thailand and Indonesia in fisheries business sector and to facilitate the endorsement of deletion certificate of Thai vessels that have become Indonesian nationals. The Embassy has been proactive in promoting investment and trade in fisheries sector to Thai business people.

Fisheries

  In this conjuction, Indonesia and

Thailand are now negotiating a new MoU on Fishery Cooperation which replaces the old one that expired in 2005.

The new MoU is predicated upon the need for foreign fishing companies to be involved in a joint venture activities scheme, through establishing an integrated fishing industry.

As two developing countries in the Southeast Asia region, the two countries share common view that promoting the agricultural sector is strategic in terms of alleviating poverty as well as for food security. Therefore, the Indonesian government has long attached importance to further develop agricultural and agro-industry sectors with Thailand.

Food security

Indonesia and Thailand have conducted an Expert Group Meeting on Sustainable Agriculture and Food Security in Bogor, 5-6 August 2009. The meeting was attended by Ministers of Agriculture of Indonesia and Thailand and also Representative of UNESCAP.

The Meeting aimed to share best experience

and practices in the area of agriculture and in respond to food security. Indonesia has reached a self-sufficiency in rice in 2008 and Thailand is the biggest world exporter of rice.

Both countries need to increase more cooperation in maintaining food security and preventing the recurrence of food crises in the region.

As a follow-up of the meeting, Deans of Faculty of Agriculture of Indonesian Universities visited Thailand in October 2009 to discuss on agricultural research in Thailand universities.

GDP in 2009: 4,3%

Stimulus budget continues

Stable currency

Democracy country

Indonesia Economy

RANK OF INVESTMENT REALIZATION FROM THAILAND

FOR THE PERIOD OF 1990 – APRIL 2009

No. SECTOR NUMBER OF PROJECT

1 Rubber and Plastic Industries 1

2 Food Industries 3

3 Mining 2

4 Electronic, Machinery, Base Metal 2

5 Trading 16

No. COUNTRY VALUE OF INVESTMENT(US$. 000)

NUMBER OF PROJECT

1 Japan 21,063,676.29 1,8192 Singapore 13,537,130.71 1,1063 Mauritius 10,521,790.98 514 United Kingdom 8,420,412.27 5105 United States of America 7,363,385.79 428…. ………………………………………… ……….. …….26 Thailand 158,573,45 32

RANK OF INVESTMENT REALIZATION BY COUNTRYFOR THE PERIOD OF 1990 – April 2009

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