JAKARTA: Indonesian officials, business executives and economists are confident that China’s eased coronavirus restrictions will increase bilateral trade and investment.
After protests erupted in several major Chinese cities against Beijing’s strict zero-Covid policy, the State Council started easing mobility restrictions put in place when the pandemic started in early 2020.
Statistics Indonesia (BPS) data showed that China remains Indonesia’s largest partner for both exports and imports, which respectively amounted to US$53.31bil (RM236bil) and US$55.90bil (RM248bil) in the first 10 months of this year.
China ranks second in foreign direct investment (FDI) to Indonesia, just below Singapore, with US$5.18bil (RM23bil) realised this year as of September, according to Investment Ministry data.
“New measures will be worked out to ease cross-border travel and pre-departure requirements in line with those policy adjustments,” Chinese Foreign Ministry spokeswoman Mao Ning told reporters last week.
Iskandar Simorangkir, macroeconomic and financial coordination deputy minister in the Office of the Coordinating Economic Minister, told The Jakarta Post on Monday that the lower mobility restrictions would result in higher-than-expected Chinese economic growth.
Chinese demand for Indonesian export commodities like coal, processed nickel, iron and crude palm oil (CPO) would also increase more than previously expected, he added.
The relaxed rules were also expected to prompt more Chinese investment in Indonesia’s processing industries for minerals such as nickel, bauxite and cobalt.
“For 2023, Indonesia’s economic growth will remain at 5.3% as stated in the state budget,” Iskandar told the Post, noting that “the European Union and the United States will face slowdowns”.
The Trade Ministry’s Policy Agency head, Kasan Muhri, told the Post that China’s zero-Covid policy helped Indonesia take a bigger role in global supply chains. Now that mobility restrictions have been eased, this may facilitate some Chinese businesses to relocate to Indonesia.
Moreover, higher spending among Chinese consumers would lead to demand growth for Indonesian products.
“There will be diversification of export products to higher-value and technology-intensive goods,” Kasan added.
Finance Ministry expert staffer Yustinus Prastowo agreed that the eased restrictions in China would “positively impact” Indonesia, as the Chinese economy would perform better than previously expected.
Chinese supply and demand would also be much more stable without the on-and-off lockdowns, Yustinus told reporters, adding: “We have a very good trade relationship with China.”
Indonesian Chamber of Commerce and Industry (Kadin) deputy chairwoman for investment Shinta Widjaja Kamdani said on Monday that China’s eased Covid measures would “positively affect” FDI flows to Indonesia.
Shinta, who also chaired the Business 20 forum during Indonesia’s Group of 20 presidency this year, said although China was facing economic problems in the housing and financial markets, looser travel requirements in China would increase confidence among investors in visiting Indonesia to explore business opportunities.
This scenario would be feasible only if Beijing sustained its Covid policy relaxation for the long term, which in turn required that the fatality rate remained low, she added.
“Specific increases in investments cannot be determined yet, as numerous factors are at play, including our own domestic economy in 2023,” Shinta told the Post.
Indonesia Coal Mining Association executive director Hendra Sinadia said that China’s eased Covid curbs should result in higher demand for Indonesian coal due to greater economic activity. — The Jakarta Post/ANN
