Anti-Malaysia Tensions Will Not Disrupt Trade: Officials

By webadmin on 10:34 pm Aug 31, 2010
Category Archive

Bilhuda Haryanto

Jakarta. Investors and government officials have expressed confidence that recent tension between Indonesia and Malaysia would not disrupt increased trade and investment between the nations, but they warned that passions could not be allowed to become more inflamed.

Gusmardi Bustami, head of international trade at Indonesia’s Trade Ministry, said the recent maritime border incident and resulting protests were unlikely to directly affect bi-lateral trade, which has seen robust growth in recent years.

However, he warned that careless handling of the diplomacy by either side could lead to unintended consequences.

“If we refer to the existing data from over the last five years, we are seeing growth [in trade],” Gusmardi said. “I see no such indication that our trade is going to be affected by the recent tension.”

He said he was confident trade would continue to expand, as it has done over the past five years, despite an occasional flare-up between the two neighbors.

Ministry data showed Indonesian exports to Malaysia have doubled over the past five years, from $3.4 billion in 2005 to $6.8 billion last year. Exports to Malaysia jumped 75 percent during the first five months of this year to $3.6 billion.

Imports from Malaysia nearly tripled over the past five years, from $2.1 billion to $5.7 billion in 2009. Malaysian imports surged during the first five months of the year to $3.5 billion.

The latest tension between the two countries was triggered by a maritime incident last month. Three Indonesian maritime officers were detained by Malaysian authorities in disputed waters and later released. Indonesian government officials said the officers were arrested shortly after detaining seven Malaysian fishermen who were illegally fishing in Indonesian waters.

Ugly protests in Indonesia followed. On Monday an ultranationalist group stormed into two Malaysian-controlled banks in Makassar and forced them to close.

One was the local branch of CIMB Niaga, which is majority-owned by CIMB Group, Malaysia’s second-largest financial service provider.

The other was a branch of Bank Internasional Indonesia, owned by Malaysia’s largest lender, Maybank.

President Susilo Bambang Yudhoyono on Tuesday said he would address the situation today.

Malaysian officials have been dismayed with the Indonesian protesters, but have been quoted as saying they did not believe trade would be affected.

Bantarto Bandoro, an analyst at the Center for Strategic and International Studies, was less confident.

He told the Jakarta Globe on Monday that it was imperative for the government to defuse the tension, or Indonesia risked losing Malaysian investment.

He also warned against extreme measures by either side that would escalate the situation.

“I’m worried Malaysia would do things that we have never imagined before, such as embargo or retaliation in our trade.”

Adi Putra Tahir, acting chairman of the Indonesian Chamber of Commerce and Industry (Kadin), said cordial relations were imperative given the two countries’ long historical ties and strong business relations.

“We have to take this matter into the upmost priority, and of course we need to do something to solve the border dispute.”