Broadening Indonesia-Saudi bilateral relations

Broadening Indonesia-Saudi bilateral relations

August 17, 2016
King Salman decorates Indonesian President Widodo with the prestigious King Abdul Aziz Medal at Al-Salam Palace in Jeddah.
King Salman decorates Indonesian President Widodo with the prestigious King Abdul Aziz Medal at Al-Salam Palace in Jeddah.

INDONESIA-SAUDI ties were initiated formally in 1948 with the establishment of the Indonesian Embassy in Jeddah and, two years later, with a Saudi representative office in Jakarta that was eventually turned into a formal embassy in 1955. It is important to note the Kingdom was among the first countries to have recognized Indonesia’s independence in 1945.

The long historic and well-nurtured bilateral relation between Indonesia and Saudi Arabia was evidently preserved with the visit of President Joko Widodo in September 2015 to the Kingdom. The president and his accompanying delegations were warmly welcomed by Custodian of the Two Holy Mosques King Salman.

King Salman decorated Indonesian President Widodo with the prestigious King Abdul Aziz Medal at Al-Salam Palace in Jeddah, the highest honorary medal granted to foreign heads of state, as an appreciation of the strong friendship and cooperation between the two countries. The two leaders held talks on a number of international and regional issues of mutual concern and interests. They discussed the state of bilateral relations and explored ways of enhancing them.

The above addressed issues were then followed up, among others, by an official visit of Saudi Foreign Minister Adel Al-Jubeir in October 2015 to Indonesia. He was received by President Widodo at his Presidential Office in Jakarta.

During the audience, Al-Jubeir conveyed the greetings of King Salman, the government and people of Saudi Arabia to Indonesia’s President. In turn, the president sent his appreciation to King Salman, expressing his wish to see the relations between the two countries pushed to higher horizons.

Al-Jubeir discussed with the president ways of enhancing cooperation between the two countries in the fields of political consultation and coordination, military, security, economic, investment, cultural, oil and petrochemical industries cooperation and other fields in order to create a qualitative leap in relations between the two countries in the services of mutual concern as well as the service of the Islamic nation.

He also held talks with Indonesian Minister of Foreign Affairs Retno Marsudi during which he discussed a wide-range of issues relating to bilateral relations and regional and international issues of mutual concern.

In a joint press conference following the talks, Marsudi lauded the depth of relations between the two countries, noting that her meeting with Al-Jubeir focused on ways of enhancing cooperation between the two countries in the field of energy, commerce and investments in addition to a number of fields.

Al-Jubeir too lauded the bilateral relations between the two countries which are based on a number of common factors and recalled that the Kingdom was among the first countries to have recognized Indonesia’s independence in 1945, confirming the Kingdom’s hope to see more development and enhancement of the strong relations between the two sisterly countries.

Expansion of Economic Ties

Naturally, bilateral trade has reflected the predominance of energy in trade between the two countries. However, in recent years, Indonesia and Saudi Arabia has agreed to double their bilateral trade value by 2020, as the two countries believe they have a lot of potential for expansion.
The total trade between Indonesia and Saudi Arabia amounted to $8.6 billion in 2015, with the Saudi investment value in Indonesia reaching $29.3 million in the first half of 2015. Indonesian exports to Saudi Arabia amounted to $3.35 billion in 2015, while imports were worth $5.14 billion. The figures are yet to reflect the potential of both countries, as Saudi Arabia is one of the biggest potential markets for Indonesia in the Middle East.

Saudi Arabia is one of the major potential trade partners for Indonesia in the Middle East. Based on data from Statistics Indonesia, the total non-oil and gas trade value between Indonesia and Saudi Arabia in 2011 and 2015 showed an annual positive increase of 3.89%. Indonesia’s average non-oil and gas export value to Saudi Arabia in the period of 2011-2015 was recorded to be $1.83 billion per year. Meanwhile, Indonesia’s average non-oil and gas imports from Saudi Arabia were recorded to be $921.23 million per year during the same period.

The non-oil and gas trade balance between the two countries experienced a 29.84% surplus in 2015. Meanwhile, Indonesia’s main exports to Saudi Arabia in 2015 were motor vehicles, palm oil, tuna, rubber and rubber products, plywood, paper and paper products, pulp, wood charcoal, and textile and textile products.

According to Maher Jamal, head of the Chamber of Commerce and Industry in Makkah, Saudi Arabia had expressed its interest in cooperating with various business players including those running professional nursing care, producing pharmaceutical products, cosmetics and medical equipment. He made this statement during his recent business visit to Indonesia. He had 34 Saudi business representatives along with him in the May 2016 visit. The businessmen were participating in the latest buying mission attended by and 100 Indonesian companies,

Both countries committed to increasing trade value by at least 15 percent annually. To reach this goal, Saudi Arabia will participate in exhibitions staged by Indonesia, while Indonesia will also be invited to participate in exhibitions held in Saudi Arabia.

In addition, to bolster its commitment, the Makkah Chamber of Commerce is planning to cooperate with the Indonesian government to create an Arabic language website and take other steps to make it easier for Saudi businesspeople to understand details of products being offered by their Indonesian counterparts.

Responding to the above commitment and considering Saudi Arabia one of the biggest potential markets for Indonesia in the Middle East, Indonesian Trade Ministry encouraged Indonesian businesses to increase the quality of their products to meet the requirements set by the Saudi authority, the Saudi Standards, Quality, and Metrology Organization (SASO).

Tourism Sector

According to the Central Statistics Agency (BPS), tourist arrivals during 2015 surpassed the target of 10 million set by the government, reaching 10.41 million, while it recorded more than 150,000 arrivals from Saudi Arabia.

The Indonesian government is working hard to attract more tourists from the Middle East, including the Kingdom, and has set itself the target of hosting 20 million visitors by 2019.

Religious and Cultural Links

Beyond economic ties, Saudi Arabia and Indonesia also maintain considerably strong religious and cultural links with each other. The Saudi government-backed Institute of Arabic and Islamic Studies (LIPIA) in Jakarta was founded in 1987 with close affiliations to the University of Imam Mohammed Bin Saud. It is estimated that over 8,500 students have graduated from the institute.

Over the past few years, the Kingdom has sent a number of Arabic teachers to Indonesia and has granted scholarships for Indonesian students to study in a number of universities in Saudi Arabia, such as King Abdullah University of Science and Technology (KAUST) and King Abdulaziz University (KAU) in Jeddah, and Umm Al-Qura University in Makkah, Islamic University in Madinah, Taiba University in Madinah, Jazan University, University of Tabuk, Najran University and King Saud University in Riyadh.

The Saudi Embassy, particularly through its religious attaché office (opened in 2008) also carries out a number of social and religious programs in the country. These include cooperating with the Indonesian Ministry of Religious Affairs to dispatch Imams during Ramadan to more isolated provinces, printing considerable amounts of religious literature in Indonesian languages, and distributing aid.

People-to-people exchanges also strengthen these religious links. Beside hundred thousands of Indonesian Umrah pilgrims, over 211,000 Indonesian Haj pilgrims come on an annual basis.

Defense Cooperation

Indonesia and Saudi Arabia signed a defense cooperation agreement (DCA) — the first of its kind — between the two of them. The agreement was signed on Jan. 23, 2014, by then Saudi Deputy Defense Minister Prince Salman Bin Sultan and Indonesian Lt. Gen. (ret.) Sjafrie Sjamsoeddin. The DCA covers training, education, counter-terrorism, and defense industry cooperation.
The agreement is significant for Indonesia. It is the first agreement of its sort that Indonesia has signed with a Middle Eastern country and the first between Indonesia and Saudi Arabia.

The cooperation between Saudi Arabia and Indonesia is underscored by both nations’ common Islamic identities. In fact, both Saudi Arabia and Indonesia, in agreeing to cooperate on counterterrorism, noted that terrorism should not be linked to any ideology or religion, in particular Islam.

August 17, 2016