Indonesia Bonding With Cambodia in Trade

 Indonesia is not importing rice from Cambodia, but it could sometime soon. (AP Photo/Heng Sinith)

By Dion Bisara

The Jakarta Globe

August 27, 2012  

Siem Reap, Cambodia. It was a chilly afternoon in 1993 at a rubber plant forest in Kampong Cham. Soehardjono Sastromihardjo, now Indonesian ambassador to Cambodia, was riding with a United Nations Transitional Authority in Cambodia convoy on a mission to supervise the country’s first general election, when a group of Khmer Rouge guerrillas appeared and stopped the convoy.

AK-47 rifles and grenade launchers were pointed at the trucks, ready to fire; a slight misstep could have resulted in disaster.

Without thinking, Soehardjono shouted: “Indonesia, Indonesia!”

Almost instantly the guns were lowered and the guerrillas retreated.

“That shows how high our name was held in Cambodia,” Soehardjono said in Siem Reap over the weekend, recalling the incident. “And it is still true now particularly among the political elites.”

Indonesia was involved in advanced talks in Cambodia during the late 1980s. Known as the Jakarta Informal Meeting, Indonesia was trying to help put an end to Vietnam’s invasion of Cambodia, in what some observers called the Third Indochina War (1978-91).

Despite these close ties, however, Indonesia has been slow to benefit from trade and investment with Cambodia, often finding itself behind other countries eager to get a foothold in the country. Indonesia’s exports to Cambodia last year were worth about $220 million, according to Soehardjono. That is a tiny drop in the $12.3 billion in total trade that Cambodia did last year.

China and Thailand made up more than half (52.5 percent) of Cambodia’s imports of $6.9 billion last year, while the United States accounts for the lion’s share of Cambodia’s exports (41.5 percent), according to the CIA World Factbook.

“We must capitalize on our close political assets for better economic ties,” Soehardjono said. He spoke in an interview with the Jakarta Globe, which was invited by the Indonesian government to attend an Asean meeting this week.

Mohamad Helmi, business development director of Galuh Prabu Trijaya, an Indonesian trading company, echoed the sentiment.

“I came to start a business here seven years ago,” Helmi recalled, “I found Cambodians disappointed. They wondered why, right after peace, Indonesians stopped coming here.”

Helmi said the Cambodian government has been very accommodating to investors, and encourages more Indonesian businesses to come to the country.

Talks to push business ties between the two countries have been held. Soehardjono said Cambodian Prime Minister Hun Sen asked three things of Indonesia on the sidelines of the Asean Summit in Bali, last November. He wanted Indonesia to import rice from Cambodia, have direct flights between the countries and invest in its telecommunications sector.

Cambodia has exported rice to Vietnam, Thailand and Europe.

“Ironically, we import rice from those two countries,” Soehardjono said. “Why don’t we import directly from Cambodia?”

Hun Sen asked for direct flights between Indonesia and Cambodia to boost tourism in the two countries. A province in Central Java has a “sister temple province agreement” with Cambodia’s Siem Reap province. As part of the agreement, the Central Java government suggests that tourists at Borobudur Temple visit Angkor Wat Temple, and vice versa.

“That arrangement won’t work if it takes a whole day to travel between the two places,” Soehardjono said.

A tourist flying on Malaysia Airlines from Jakarta to Siem Reap, for example, would have to spend four hours on the plane and another four hours in transit at Kuala Lumpur International Airport.

The third request from Hun Sen was for Indonesian telecommunications company Telekomunikasi Indonesia to invest in Cambodian telecommunications provider CamGSM. Telkom pulled out of the bidding in October last year prior to the talks, partly because of price differences.

Cambodia’s economy has been growing at 6 percent annually for the last two years, pointing to a promising future for investors in the country.

Soehardjono said it was now up to the Indonesian business community to enter the Cambodian market. “Our consumer products are in high demand, in particular our pharmaceuticals, which they regard as having good quality,” he said, adding that agricultural machinery, fertilizer and tires from Indonesia were also well received.

Helmi said the agricultural sector in Cambodia was lucrative with low labor costs and improving yields.

And foreign investors can hold up to a 100 percent stake in Cambodia, though that could change in 2015. “So, if my fellow Indonesians want to come to Cambodia, the time is now,” he said.