For Indonesian leader, a chance to build rapport with Obama

AP News
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Posted: Oct 24, 2015 3:19 AM
For Indonesian leader, a chance to build rapport with Obama

WASHINGTON (AP) — Indonesia's leader is making his first official U.S. visit since sweeping to power a year ago. It's a chance to build a rapport with an American president with personal ties to his country, and to persuade American companies that he'll make it easier to invest in Southeast Asia's biggest economy.

President Joko "Jokowi" Widodo will meet President Barack Obama on Monday, then huddle with U.S. business leaders, first in Washington, then in the technology hub of Silicon Valley. Business deals valued at $19.5 billion, including joint projects between Indonesian state utilities and U.S. firms in the power sector, are due to be announced, according to Indonesian officials who spoke on condition of anonymity because they were not authorized to speak publicly about planning for the trip.

Obama, who lived in Indonesia as a child, visited the country twice during his first term as he sought to put more emphasis on America's ties with Asia. But like many countries in the region, Indonesia remains careful to balance its relations between the U.S. and China, the area's dominant economy. Indonesia doesn't count itself among nations contesting for islands in the disputed South China Sea, although it is concerned that China's expansive maritime claims extend to the waters of Indonesia's Natuna Islands, where Indonesian officials say they want more U.S. investment.

Reflecting the maritime security concerns, the U.S. is expected to provide more support for the sprawling archipelago's coast guard. The two leaders will also discuss Islamic extremism. Indonesia, the world's largest majority-Muslim nation, does not contribute to the military effort against Islamic State group, but has been an outspoken critic of the group, which has drawn hundreds of Indonesian recruits to fight in Syria and Iraq.

Despite the areas of common interest between Jakarta and Washington, Indonesian economic protectionism has remained a drag on its relationship.

U.S. trade with Indonesia was only about $28 billion last year, less than with Vietnam, a much smaller economy. Foreign direct investment accounts for a smaller percentage of Indonesian GDP than many of its neighbors.

Tami Overby, senior vice president for Asia at the U.S. Chamber of Commerce, said that regional competition for foreign investment will grow more fierce when the U.S.-backed Trans-Pacific Partnership trade deal is ratified and takes effect, likely in a couple of years' time. Indonesia is not among the 12 participating nations.

Citing a 2014 think tank study, Overby said there's potential to double the current $60 billion in U.S. investment in Indonesia in five years but it needs to take action to improve the business climate by reducing demands for local content, opening up more sectors to foreign investment and cutting red tape.

It also needs to make the legal system more predictable, she said, citing the case of U.S. energy giant Chevron, which operates Indonesia's largest oil field and is planning Indonesia's first deep-sea gas field. Chevron is pushing for resolution of cases of several local employees and contractors imprisoned or on bail on contested charges of corruption.

While Jokowi has a clear economic agenda on his U.S. trip — drumming up investment to help revive flagging growth at home — his positions on foreign policy are more murky.

Jokowi, a former Jakarta governor with a humble background who captured popular imagination to win power, has made little impact on the world stage to date. But he did get negative headlines by refusing to stop the executions of foreigners sentenced to death for drug trafficking. That badly strained relations with neighboring Australia.

Jonah Blank, an expert on Asia at RAND Corp., said one area where Jokowi has a chance to make his mark with Obama is on climate change. His visit comes ahead of a global climate change summit set for Paris in December where the U.S. will be pushing nations to set binding targets for reducing emissions.

Indonesia is major source of greenhouse gas emissions. Researchers estimate that since September, emissions from Indonesia's rampant land and forest fires exceeded the average daily emissions from all U.S. economic activity. That's because many of the fires are on peat lands that are extremely rich in carbon.

Jakarta has pledged a 29 percent reduction in emissions by 2030, but provided few details on how it will do it. Blank said Jakarta has also spoken of upping that target to 41 percent if it gets billions in foreign aid.