Russia and Indonesia sign stack of business deals

Moscow will provide a one billion dollar loan to Jakarta to buy Russian military hardware. The deal was signed during a meeting between the Russian leader and his Indonesian counterpart, Susilo Bambang Yudhoyono.

Meeting in Jakarta, the two Presidents also discussed co-operation in energy, aviation and space. Both leaders expressed their satisfaction with the talks. Russia's President Vladimir Putin pointed to the need for greater co-operation.

Official greeting ceremony
Official greeting ceremony
“We have agreed to more actively use the potential of our national economies, moving to closer co-operation in the areas of energy supplies, the minerals industry, as well as aviation and space research. We also see a lot of prospects for co-operation in the field of military equipment. To add, we hope to sign an agreement for protection of investments, and we have to stimulate direct contacts between business communities and create favourable conditions,” the President said. 

Indonesian President, Susilo Bambang Yudhoyono, has also underlined the necessity of further developing the relations.

“We hope our bilateral relationship will develop in terms of investments. So far, the amount of Russian investment into the Indonesian economy has been small. But we are planning bilateral agreements now worth more than $US 4 BLN, particularly in the sphere of natural resources, oil and gas,” he stressed.

Meanwhile, the meetings have already brought a series of big business deals.

Russia's Lukoil company struck a deal for joint oil prospecting together with a local company in Indonesia, as the country’s shelf is believed to be potentially productive.

“We will sign the agreement to start the research of the shelf. Our geologists think it is potentially productive. If reserves of hydrocarbons are confirmed, we will start the development. Our geologists consider that there are reserves of about 150 MLN tonnes,” commented Vagit Alekperov, Lukoil President.

Russia’s aluminum company, Rusal, signed a contract for establishing a joint venture with the Indonesian golden miner, Aneka Tambang.

Also, the meeting resulted in a number of agreements in the fields of sports and culture.

Indonesia is very good geographically. The Biak Island already has an airport with a runway long enough for a Ruslan plane to take off. This country also wants to join the space club – it’s rich enough and very populous. I think the project will be a success.

Vladimir Degtyar
Director General, Chief Designer
Makeyev Design Bureau

The two countries had close economic relations back in the 1950s, ever since Moscow recognised Indonesia's independence. Up to the early 60s, Indonesia relied heavily on the USSR for the bulk of its arms supplies. However, after the 1965 change of leadership, relations cooled.

“Indonesia appears friendly to Russia. The older generation obviously remembers the times when the Soviet Union was helping and it was help in real need. And of course there are Russian tourists there now and they can see us in our natural state,” commented Evgeny Belenky Russia Today’s media analyst, who spent 16 years in South East Asia working as a correspondent.

Now Russia seems back in the game, growing ties driven by big business. Last month, Russia agreed to deliver six Sukhoi fighter jets to the Indonesian Air Force. Russia wants to tender a bid to build Indonesia’s first nuclear power plant. And Russia’s Rusal, the world’s largest aluminium producer, is planning a joint venture with Indonesia’s nickel and gold miner Antam.

“ASEAN has pronounced aloud that Russia is kind of a counterbalance to the two big players influencing South-East Asia at the moment: the U.S. and China,” said Mr Belenky.

Russia and Indonesia are set to build a facility on the Island of Biak to launch satellites from Russia’s Ruslan cargo planes. The ambitious project called “Air Launch” with a price tag of $US 200 MLN will be up and running in less than four years’ time.

Vladimir Putin said his Indonesian counterpart is now expected to visit Moscow. But it’s not all about high politics and business between Russia and Indonesia. Ordinary people are interested in each other’s countries as well. 

Russian lessons at the University of Indonesia are a hit with students, as more than 100 people have opted for the course this year. Some study in simply out of curiosity. Others hope it’ll help them land a lucrative career in the media, foreign affairs or tourism industry.