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Interfax.com  |  Interviews  |  Wahid Supriyadi: Indonesia thinks OPEC member states could come to a bridge



Interviews


June 06, 2016

Wahid Supriyadi: Indonesia thinks OPEC member states could come to a bridge


Indonesian Ambassador to Russia Wahid Supriyadi has given an interview with Interfax in which he speaks about the results of the Russia-ASEAN summit, prospects for achieving an agreement on oil production freeze in OPEC, Indonesian-Russian military and technological cooperation and the launch of direct air communication between Indonesia and Russia.

Question: Mr. Ambassador, how do you evaluate the results of the Russia-ASEAN summit and bilateral negotiations between our presidents? How do you define in general Russians role in dialogue between ASEAN member states, taking into account the fact that the U.S. is their major partner?

Answer: The Russia-ASEAN summit I think outcome is very positive, the 30th declaration reflects the spirit of how to make ASEAN and Russia closer, especially in cooperation in field of economy, trade and investment. They are very serious to materialize these closer relations by defining our actions. We are talking about real things, for the benefits for the welfare of the people both in Russia and ASEAN.

ASEAN today is a quite an independent regional group. We are close of course to the U.S. but we are also close to Russia as well. There is nothing to talk about that. As to the bilateral meeting this is the first looking visit of our president to Russia. Both leaders have very productive, very friendly discussion on how to encourage more economic, trade, and investment relations. I guess during the bilateral meeting 90% of the topic discussed is how to make closer and better in these areas especially economy, trade, and investment. You know, both countries are very big countries and both belong to the G20, we rank number 17 in the world. Russia had also a big demand in economy, as well as the area and the biggest country in the world and also the population. Not many Indonesians know that Russia also have 25 million Muslims. It is the biggest Muslim country in Europe, actually. On the other hand [in term of size] we are a big economy in South Asia. We are growing. Our economy grew almost 5% last year. But the reality doesnt reflect the potential of both countries. So the spirit of President Joko and President Putin is how to maximize our potential, especially in trade and investment. As you see our president found some time, he met with six prominent CEOs from prominent corporations in Russia. I was told by Jakarta that usually president would receive no more than four businessmen during his visit, and this is the biggest. It means that our president has a lot of interest in forging relations, especially on business. All these business people have actually been in Indonesia and have promised to expand their presence in Indonesia. This is a huge opportunity. Rosneft especially has promised to invest something like $13 billion dollar in building a refinery. At the same time also Rosneft invited Indonesias Pertamina for their production in upstream industry in Russia. And RZD also with the Indonesian railway authority is now in the process of sending an MoU to further [increase] understanding between the leaders. Other private companies like Black Space would like to expand, especially refineries and also coal and mining in Kalimantan. So overall the discussion on trade, investment is very encouraging. This meeting have been very productive.

Q.: Recently our Economic Development Minister Ulukaev said that we are waiting for an official request from Indonesia to create a free-trade zone between Indonesia and the Eurasian Economic Union. When this request will be send? In what time this free-trade zone may be launched?

A.: We in Indonesia, our foreign minister, we have been discussing this for quite some time seeing the potential of the EEU with around 190 million population. Its a huge market in Europe. I should note that we are also a member of ASEAN. Last year we came to materialize the ASEAN Economic Community, and there is a huge potential on this side. So I think it there has been a very positive reception of the idea of how ASEAN could sign an agreement with the EEU. After the visit I have a lot of requests from both Indonesian businessman to come here and also from Russians to come to Indonesia. This is quite positive. You know, in the past not so many Indonesians were interested in doing business with Russia because of the knowledge that we have very limited potential of Russia, but now it seems very encouraging. The Indonesian embassy here is planning to be giving in August, it is with relation with our independency, an Indonesian festival. This is the first time when we have such a festival in Russia. We invite possibly some hundreds business people coming to Russia, we try to arrange some meetings with the counterparties in Russia. So this is a follow up of what both leaders have discussed the other day.

Q.: But returning to the question about the free-trade zone. When may it be launched?

A.: For me the sooner, the better. This covers many departments and ministries in Indonesia. We are not the only one to decide, but the spirit is there. I think that the visit of President Joko, we hope that it could materialize sooner than later. We dont talk about the timeframe at the moment. As I have mentioned this is not the only domain of the Foreign Ministry, we also have to talk with our Trade Ministry in Jakarta and other stakeholders. But the spirit is a very positive.

Q.: If Indonesian candidate takes a post of the OPEC head, what policy will Jakarta conduct and what ideas will it bring trying to stabilize the oil market? Will Indonesia try to push other OPEC members to have an agreement about freezing oil production?

A.: Its a bit early to talk about policy, but the idea of Indonesias joining back OPEC is that we are one of the biggest importers of oil, but in the past few years it has been exporting. OPEC member countries do not specify when importing countries have to quit. I think for us, we have been a member for some time, we have experience in this. I think it is our benefit, our interest to keep the price level of oil at a manageable level. Under current situation many thought that it is too low for exporting countries. At the same time we are still producing oil, but we also import. We have to keep a balance to benefit OPEC member countries. Although Russia is not a member country I think it is very concerned with the decline of oil prices.

Q.: How do you evaluate the positions of Iran and Saudi Arabia about the freezing of oil production? Is it constructive?

A.: Both countries have their own interest to freeze this on own reason, but I think the idea of Indonesia is to look into it jointly with OPEC. We have to discuss it openly and find any feed from member countries. I would not like to specialize on that. We are still in the process of beating for the leadership of OPEC.

Q.: When may the next meeting between Russia and OPEC countries be held at the ministerial level? How would you comment on the opinion that OPEC as an organization is now dead?

A.: I dont think so. I know that there are some disagreements between OPEC member countries, but I think these disagreement will be discussed openly, and we think one could come to a bridge because Indonesia is quite neutral on this. Our candidate is very well-known former diplomat. We could be on the bridge. I feel all the differences will be solved.

Q.: And what about the meeting on the ministerial level? When may it be held?

A.: I dont have any information about the exact time. I think it is good because despite the fact that Russia is not a member of OPEC, I think it is good that our oil producing countries could meet together to discuss the best way to benefit oil producing countries.

Q.: So nowadays there is no discussion about holding such kind of a meeting, is it?

A.: Not that I am aware of. But maybe at the technical level they have already started this discussion. But I am not quite aware of it.

Q.: Indonesia and Russia have an agreement on the construction of oil refinery. What is the price of the contract? When may the construction start?

A.: As far as I said, they have already sent the MoU, Rosneft and Pertamina. Last week, on May 26, they there was a singing of a framework agreement. Its moving from the MoU. We hope that 2018 Russia and Pertamina will start building the refinery in Indonesia, but our president actually wants in a little bit earlier. They have still to do some technicalities, paper work and so. Hopefully in 2018 they will start to build refinery in Tuban in Java.

Q.: What is the price of the contract and who is going to invest in it?

A.: The total investment could be as high as $13 billion. And of course this investment could be settled with Pertamina. I dont know the exact deal, how much percent each part will put. Im not going into details.

Q.: What Russian oil-producing projects is Indonesia interested in? Has Indonesia held any negotiations with Russian companies about this issue in addition to Rosneft?

A.: As far as I said, Rosneft has also offered Petramina to participate in two oil wells in Russia and also in the upstream industry. Other I think you have to ask the department [of oil], still at the early stages at the moment to talk about technical issues.

Q.: Recently the Indonesia defense minister declared the interest of the country to purchase Russian Sukhoi Su-35 jet fighters. At what stage are the negotiations and how many jet fighters is Indonesia going to buy?

A.: Yes, the defense minister has been visiting Russia and also even the chief of the army is also here. So this means that we are interested in acquiring the latest fighter technology like Sukhoi Su-35, even the submarines the Kilo-class and also the amphibians planes for fighting. At the moment they are still negotiating on many things, including the price and conditions. In Indonesia the law states that any participation in military weaponry should be followed by the transfer of technology and also joint production. Now they are talking in detail about these conditions. This is still an ongoing process. I dont have any idea when exactly, but we are planning to buy between eight to ten jet fighters.

Q.: Does Indonesia have an interest in Russian S-300 systems or S-400?

A.: I dont know in detail because this issue has been discussed by our technical ministers, like our defense minister at this moment and his counterpart in Russia. But of course air defense systems is one of the things we are interested in.

Q.: What military and technological contracts and what types of weapons is Indonesia interested in? s there an interest to purchase Russias Buk system, which was recently presented in Indonesia by our defense ministry?

A.: This has been during the visit of minister of politics, law and security in Grozny last week. Rosoboronexport presented him some weapon systems which are being offered in Indonesia. There has been an interest in Indonesia to acquire systems that could enhance the capacity of our military, especially in area of in fighting against terrorism. This is of course still on early stages, but our ministry also indicated its interest to buy some devices related to antiterrorist group detachments in Indonesia.

Q.: Can Indonesian resorts, especially Bali, replace such tourist destinations as Turkey and Egypt, which are now closed for Russian tourists?

A.: Last year Russian tourist visits to Indonesia declined around 26%, but the first three months of this year has an increase more or less the same. We see this is a positive trend. The only biggest challenge is that there is no direct flight. I think one of the problems, the main problem, Russians wishing to go to Indonesia have to go through Middle East and they have to spend sometimes from five to six hours. This is not good, especially for business people. Also they fly to some Asian countries and then to Jakarta. In order to attract more tourists to come to Indonesia number one we have already issued free visa facility for Russians. In written we also ask Russian counterparts here. I stated this to ministry to foreign affairs that can make at least easier for Indonesians to come to Russia, because 10% of Indonesian populace is middle-income. Second is that as I have mentioned we are in the process of opening a direct flight from Bali of Jakarta to Moscow.

Q.: Unfortunately even now the prices for flights for Russian tourists are rather high. Is the any intention to take some measures against it, for example subsidize the flights?

A.: Under current situation, Indonesian hotels are among the cheapest in the world. In the different service we are the number one in the competitiveness for the hotel prices. You can have $100 staying at a five-star stars hotel in Indonesia. But of cause airlines is a quite open market. As far as I know there are a lot of people who buy tickets to Russia and then to Indonesia, even we dont subsidize. I dont think that under current system we allowed to subsidize those. It is a purely business matter.

Q.: When such direct flights may be launched? May it happen this season?

A.: Again for me the sooner, the better. This does not come only to an interest of tourism industry but also in the trade. One of the problems of Indonesia to export their tropical fruit to Russia is because there is no direct line and the connection is still low. On the other hand after visiting several regions in Russia I have understand that many people are interested in tropical fruit. This is good to have a direct flight. They are shipping for two months from Indonesia to Russia. So this is the biggest challenge. The more flights we have the better not only for the tourism industry but also for trade.



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