Apec, Indonesia, and China

APEC Summit has been officially closed on Tuesday (11/11/2014). This meeting was the most important meeting among other meeting for development and economy. This meeting was not only attained by leader of certain countries, but also CEO from big companies. There were plenty of occasions and agreements happened during the meeting such as awkward handshake between Japanese Prime Minister, Shinzo Abe, and Chinese President, Xi Jinping, U.S and China willing to reduce their carbon emission, and investment agreement between Indonesia and China. On this essay, I prefer discussing investment agreement between Indonesia and China to discussing other else topics.

Mr. Joko Widodo, seventh president of Indonesia, had succeeded to attract a lot of investors to invest to Indonesia. After finishing the Summit, Joko Widodo succeeded to make US$ 1.6 billion of memorandum of understanding (MoU) of investments from Chinese entrepreneurs with Indonesia entrepreneurs. This investment agreements are believed as the most important agreement for Indonesia economy because one of the cause of weakening of Rupiah due to lack of foreign investment. If we make an analysis regarding to the MoU, there are plenty of critical points we can note.

First, since Indonesia has been improving its relationship with China, nowadays, China has been making enormous investment in Indonesia. Plenty of Indonesia enterprises have made financial cooperation with Chinese companies in order to expand their business. Second, China comes up as the biggest economy country nowadays. When most countries all over the world are difficult to generate economy growth above 5%, China is still able to result economy growth at level around 6% to 7% a year. Third, there is shifting of investors from western countries such as US and countries in Eurozone to China. Financial crisis happened in 2007 to 2008 still have disastrous effects for US and countries in Eurozone. They only make prediction of their economy growth at around 1% to 2% at following year, whilst China is still confident to make economic forecasting at around 5% to 6%.

However, nowadays, China gets serious threat from other countries. Vietnam, for instance, has been selected by Samsung to invest its new plant. Some foreign big companies have been searching other potential countries in order to make investment or expand their business. This is an opportunity for Indonesia to be alternative country for big company to make investment besides China. Indonesia should learn from Vietnam on how to create attractive country for foreign investors. Nevertheless, success of Mr. Joko Widodo to attract foreign investors to come to Indonesia should get applause and appreciation. This can be a sign of improving of Indonesia economy. Hopefully, Rupiah exchange rate to US can be stronger due to the MoU of investments so that Government can delay their plan to raise fuel price by the end of this year and there are plenty of job fields available for Indonesia people.