Indonesia’s Ambassador to Iran is very emphatic on developing economic and trade ties to Iran and further stresses the extension of tourism between the two countries. Although he tends for a direct flight between Tehran and Jakarta to be launched, Iranian tourists mostly prefer Bali to be their leisure destination where the Pacific Ocean and the Indian Ocean cross each other’s paths. To learn more about the processes and trend of development of economic relations between the two countries, we conducted an interview with Octavino Alimudin which you may find below.
AVA Diplomatic’s Exclusive Interview with
Mr. Octavino Alimudin, Ambassador of the Republic of Indonesia to Iran
Which economic and political delegations have visited Iran for consultation purposes this year?
If we consider the Gregorian year between 2016 and 2017 or even the Solar Hijri year, a large number of delegations have visited Iran so far.
In fact, Indonesia views the Islamic Republic of Iran as possessing great significance and that is why the Pertamina officials, which is Indonesia’s state gas and oil company, as well as representatives from Indonesia’s Central Bank came to Iran.
In December, 2016, the Indonesian President, Joko Widodo, visited Iran along with four other top-ranking officials. On that trip, the Coordinating Minister for Economic Affairs, Minister of Energy, Minister of Foreign Affairs, Minister of State, the chairman and a high-ranking official from Indonesia’s Investment Coordination Board accompanied the President.
Two months after that, the Coordinating Minister for Economic Affairs paid another visit to Iran and met with his counterpart, the Minister of ITC and some Central Bank officials.
The fact that a country’s high-ranking official visits Iran twice in just two months and his numerous meetings with Iranian authorities are both indicative of Iran’s special significance to Indonesia.
Pertamina officials also met with authorities from the NIOC and Ministry of Oil. They even discussed financial issues over at a session with the NIOC.
Indonesia’s Minister of Agriculture traveled to Iran and met his Iranian opposite number.
On its visit to Iran, Pertamina not only negotiated oil and gas, but also talked about other areas, agriculture, monetary issues and fertilizers included.
Moreover, we can mention the visit of an Indonesian delegation that took part in the 3rd joint commission with Iran, and the next session will be held in September in Indonesia.
What economic cooperation does Indonesia have with Iran as the largest economy of Southeast Asia?
At the moment, one of Indonesia’s largest banks, Sinarmas, is connected with ten Iranian banks and they conduct transactions, which will make possible direct payments in Rial and Rupiah.
Of course, there are negotiations in the pipelines between the officials from the Central Banks of the two countries in order for them to be able to increase their contacts, remove financial barriers and develop their banking cooperation in the future.
Please explain to us about the banking barriers that are about to be removed.
Actually, it is important to Indonesia whether the clients are well-known or not, and they want to make sure if they – the clients – are familiar with banking regulations in Indonesia. Everything is being done this way and there won’t be any problem in this area.
Sinamars is a reputable, well-credited bank that operates in the field of exporting paper and palm oil, too. The Iranian side, of course, is trying to achieve thorough familiarity with the Indonesian law. In my opinion, there is not going to be any problem now that the two countries’ Central Banks officials are directly in touch to discuss the matter.
Due to the US sanctions and the share the US owns in some banks in other countries, most of them are extremely cautious when it comes to making contacts with Iran. Is this also true about Indonesian banks?
Indonesia tries to remove financial barriers or find a way to have them lifted. That is why when Pertamina purchased Iran’s LNG, Indonesia didn’t pay for it in dollars, because the currency in use was euro. That was a trick to avoid using dollar. That deal also used banks that had fewer problems in that area and did not face any restrictions in making deals with Iran.
Sanctions, however, are either unilateral or multilateral, and we took into account which sanction to pay attention to and which one to lose sight of.
It is necessary to mention that we defended ourselves in FATF against charges for financially supporting terrorism. We see that Iran is trying, too, and as long as it shows good will, Indonesia makes efforts to remove banking barriers as much as possible.
How large has the bilateral trade balance been between Iran and Indonesia over the past years? What perspective is there to increase it?
If we set the start point at January, 2016 and compare it to 2015, we see 38% of increase. In 2016, the total trade balance was $338mn and the year before that, $273mn.
If we consider January and February, 2017, the trade volume equals $141mn which is half as much as last year’s total. In contrast, January and February, 2016 weighed as much as $57.22mn which now shows 400% of growth.
So on this basis, it can be said that we will be witnessing a progressive trend until the end of the year and the trade volume will be bigger than the previous year.
When the two Presidents met, of course, it was decided that the trade volume shall achieve to an annual amount of $2bn. Even when Iran’s Supreme Leader met with President Joko Widodo in Iran, he expressed his hope and optimism toward the realization of this goal in the near future.
How much is the share of each country in these trades?
It is currently in favor of Indonesia, but if we also take oil and gas into account, then it favors Iran, because a large amount of LPG has been purchased from Iran and Indonesia is going to buy more. But when only considering non-oil products, then the balance is to Indonesia’s advantage.
At the moment, there are Iranian companies that purchase palm oil from Indonesia and this way, Indonesia’s palm oil gradually makes its way into the Iranian market. Other companies may buy that in the future, too, and this will place Indonesia’s export volume on an ascent.
The two countries have carried out consultations regarding the sale of crude oil and increasing LPG exports. What agreements have been reached?
There are ongoing negotiations for purchasing LPG. Since last year, we have purchased 88 thousand cubic meter of Iran’s LPG, and we intend to increase it to 550 thousand m3. Regarding oil and gas, in February, 2017, Indonesia proposed oil production to Iran that includes two of Iran’s oil fields named Mansouri and Ab-Teimour. We are waiting for Iran’s response to it, at the moment. We are aware, of course, that since Iran’s cabinet has just changed, it may take a little longer to respond.
In the last four years, an agreement was signed between the two countries to establish a refinery in Indonesia’s Eastern Java. How much progress has been made in this project?
There were talks about it in the past and we are still negotiating. Many meetings with Iranian and related companies were convened; the Presidents spoke of it and we hope for these talks to result in positive effects. We are waiting for Iran’s response and decision, in fact, esp. now that China has agreed to pay for the costs and we are waiting for Iran to supply its crude oil. I hope this agreement comes to effect as soon as possible.
Considering that the agreement is yet to be finalized, can you determine how much share each country will have in it?
There is still a lot to be done about the details of it and we are negotiating. On the other hand, Indonesia needs to answer some of Iran’s questions concerning some unclear points and work on them.
In the beginning, negotiations were being conducted between a private company from Indonesia and the NIOC. On the other hand, there are talks between Ministers and officials about it. As unclear points go away gradually, negotiations will come to fruition. There is, of course, an Iranian consortium engaged in building a refinery in South Sumatra on the one hand, and on the other, we are looking forward to seeing how they would respond to our proposal regarding the two oil fields in Iran.
When was the last joint economic commission held between the two countries? What has been approved of there?
The last session was held one month before the President’s visit to Iran, which was in Indonesia in November, 2016. At the meeting and when the two Presidents met, it was decided that the two countries regularly monitor the economic commission, study its results and follow up on its approvals. That is why two months after the President’s visit to Iran, the Coordinating Minister for Economic Affairs travelled to Iran to somehow see about the commission’s approvals.
The Coordinating Minister also expects Iran’s Minister of ICT to visit Indonesia for the purpose of following up on these approvals and if things go forward as planned, it is our hope the ICT Minister will host the next economic commission in 2018 in Iran.
There were detailed talks at the session including about the formation of a business negotiation committee in which the two sides could discuss preferred tariffs and work out issues regarding investments and related regulations.
The two sides carried out good talks regarding Pertamina, chemical fertilizers, promotion of agricultural companies and investments which brought about positive results. As the trend of tourism development is at its peak, tourism was another source of negotiation. It was also decided that a direct flight line be established between Iran and Indonesia. They talked about standardization and customs, too, and I hope these negotiations serve as a prelude to drafting and signing MOUs in the joint commission.
What is the two countries’ largest joint project about? How far has it gone?
If the NIOC accepts Indonesia’s proposal about the two oil fields, then Indonesia will invest $3bn in just one oil field alone, and if it accepts both, then the numbers are going to be a lot higher.
About Iran’s investment in Indonesia, it can be said that MAPNA was scheduled to build a mobile power plant for Indonesia. MAPNA had built a power plant in North Sumatra earlier, but if it intends to build the new power plant, too, then it should take the project in an auction. Only then will it be a good investment. Last year, Iran was ranked 33 in Indonesian investment projects which is a better position than that of its neighboring countries like Afghanistan and Pakistan, but Mauritania, a small country on the gulf of the Indian Ocean, stood at 10th in investment projects in Indonesia.
Last year, of course, Iran invested in 16 projects and invested $3.14mn in our country.
Indonesia owns significant potentials in some products such as palm oil, paper and wood industries. How much palm oil did it export to Iran last year?
Iranian companies bought palm oil from Indonesia, but as far as I know, it was purchased from a third-party country and not directly from Indonesia. But there have been talks so the export can be directly done.
According to our statistics, Iran will need an annual amount of 500 thousand m3 of palm oil and we have enough capacity to produce and export it. At the presidential inauguration ceremony where Indonesia’s Coordinating Minister was present, he met with Iran’s Ministers of Energy, and the matter of exporting palm oil came up. It was stated that Indonesia is fully prepared to export palm oil to Iran and build a refinery for it in here.
The tariff for exporting palm oil is over 40% and taxation rate on it is high. But the authorities have negotiated to enlist palm oil in low-tariff and low-tax commodities to export to Iran. Also on the case of building the refinery, we are waiting for Iran’s response.
It should be mentioned that Indonesia and Malaysia are main producers of palm oil and none of them burdens the other with restrictions and each is free to contact importers on its own. Malaysia has done very well in this regard and even established an information distribution center for palm oil in Iran. However, we cannot say Malaysia has created limitations for us; perhaps one of the reasons why Indonesian companies have been less in cooperation with Iran is the high tariffs on palm oil that have kept Indonesian palm oil producers away from entering Iran’s market.
Sinarmars Group is a large, strong corporation, anyway, that has come to Iran and done pretty well in terms of palm oil and paper production. According to the statistics, the export of palm oil to Iran in 2016 equaled $33.6mn, whereas it was more than that in 2015. Another reason why we are trying to negotiate the increase of palm oil export to Iran or even the establishment of a refinery in the country is to enhance this number.
Sinarmars Group has another branch in Dubai and so far, the palm oil transit has been done through Dubai, but we are trying to drive the shipment directly to Bandar Abbas or Bushehr and not carry out the transit from another country.
There are viral controversies regarding the detrimental effects of palm oil on humans’ health on the media. Have you had any consultations in this regard with Iranian officials?
When we talk about issues and concerns of palm oil, there are two matters to consider; first, the effect of its plantation on the environment and second, the side effects caused by it.
There have been negotiations concerning the environment, and even Indonesia talked to the EU and environmental organizations and displayed evidence that proved planting oil palms does not harm the environment. Although breeding this plant requires a great deal of water, it leads to greening the environment more than before and even contributes to it.
Methods for planting it and other related issues should be closely studied, but generally speaking, Malaysia and Indonesia, as palm oil producers, have perfectly taken environmental concerns into account and ensured that not only planting oil palms is not detrimental to the environment, but it may also be beneficial to it.
But regarding other cases, it should be compared to canolla oil, sunflower oil and other forms of vegetable oil that are available in the market. In Iran or Indonesia, large amounts of palm oils are used and if this oil had caused any problems, then it would not have been easily accessible in the market anymore.
So you believe palm oil doesn’t badly affect our health?
There is a printed article that shows crude palm oil contains large amounts of vitamin A and E and antioxidants that are useful for human health and even APEC, which is a reputable international organization, which consists of big countries such as China, the US, and Australia, has concluded their research of oil palms, because it benefits the poor economically and is industrially profitable.
Have livestock and agricultural companies invested in Iran?
A joint agricultural commission was recently held between the two countries in Tehran at which the officials from Indonesia’s Ministry of Agriculture and Iran’s Ministry of Agriculture exchanged views and negotiated ways to increase trades and exchanges in the field of agriculture.
They concluded at the meeting that some agricultural products can be of interest to both sides. Indonesians like Mazafati (bam date) very much and our country would like to import that.
Indonesia has also proposed to Iran to use lands in Indonesia for planting tropical fruits and later, it can exclusively export them to Iran or through Iran to other countries.
Is there any specific agreement drafted in this regard?
Not yet, because the joint commission has formed most of the working groups to negotiate and exchange views and we hope that at the next meeting where the Minister of Science is present, the Minister of Agriculture takes part, too, and concludes the negotiations.
What agreements have been reached in tourism?
There is no final MOU in this area, but there are some agreements. When we talk about tourism, we should bear two points in mind; first, there should be tourism promotion in both destinations; second, traveling facilitations should be provided by both countries. Indonesia’s Minister of Tourism agreed, of course, to increasing the number of Iranian tourists, which has become possible now.
We hope to be able to discuss tourism at the next joint economic commission and get some results out of it. And because there are joint commissions of economy, science and technology and consultations as well as agricultural working groups between the two countries, it is best to make progress in this case within this framework and prepare the draft of an MOU in tourism.
What measures have been taken to ease the visa issuance process for Iranian citizens?
We have tried now to shorten the time of visa issuance and the process time has gone from five to two days. This is good facilitation for Iranian tourists, because each year, esp. before the New Year holidays, the number of Iranians who want to visit Indonesia gets doubled. In addition, it has been tried to ease the preconditions to issue visas; the required documents and preconditions have been eased for the sake of applicants as much as possible; we have even spoken to travel agencies inside Iran or Indonesia so Iranian tourists can travel with safe agencies with their comfort served at the top. At the moment, Indonesian travel agencies are training tour guides in Farsi to enable them to communicate with Iranian tourists in their language. Actually there are things in progress to increase the number of Iranian tourists.
How many Iranians traveled to Indonesia last year?
In 2016, 9900 visas were issued. In 2015, it was fewer than that, 5600 visas. This year, August, 8 thousand visas were issued and it can be anticipated that the number of Iranian tourists to Indonesia will go much higher than in 2016.
A direct flight between Iran and Bali will have a significant effect on increasing Iranian tourists to Indonesia. Why is Bali chosen as destination?
Maybe it’s better to ask this from the chairman of Mahan Air, because he said that it seems like Iranian tourists are more interested in Bali. On a trip Indonesia’s Coordinating Minister for Maritime Affairs and Fisheries had to Tehran at the time of the Presidential Inauguration, it was proposed that a direct flight be launched between Tehran and Jakarta; but most of the visas we issue now are for Bali, anyways.
Another subject is the counterterrorism cooperation between Iran and Indonesia and fight against the IS. The Indonesian Police have recently arrested some of IS members who were after blowing up the Presidential Palace, and fighting the IS has been a serious case in Indonesia. Is there any cooperation between Iranian and Indonesian intelligence and military services?
Yes, we cooperate with them. The Indonesian Police Chief was here in Iran a while ago and a letter of intent was signed with Iran’s Police Chief, and there law enforcement cooperation between the two countries. In terms of counterterrorism, we welcome promoting any cooperation. As you know, it is possible that some Indonesian citizens join the IS in other involved countries than Iran.
Indonesia is a victim of terrorism and the IS and we welcome further exchange of information and cooperation in this regard. There is even readiness for training and educating military and law-enforcement groups, because there is a center in Indonesia, named OCLEC that is for counterterrorism and we can have good cooperation with Iran in this field.
In an LOI that was signed between the two countries, of course, other issues such as fighting drug and human trafficking, and refugees are referred to in addition to counterterrorism.
In the past, Indonesia was path for refugees to cross from Iran to Australia. Are you still under Australian pressure not to allow Iranians into Indonesia?
We convened a forum entitled “the Bali Process” where we discussed travel-related issues and unusual immigrations which includes individuals who intend to travel to Indonesia for vocational and asylum-seeking purposes without bearing any document.
The Australian government does not give us any orders and we are not under any pressure from this country. Even the Australian Ambassador to Iran has never requested me to not allow Iranians to travel to Indonesia. If we issued nine thousand visas last year, it was only the job of us, our Embassy and our decision alone. If we happen to need to discuss these matters, it will happen within the Bali Process.
It should be said, of course, that Indonesia is a transit path. The foresaid refugees are not necessarily Iranian and they come from other countries, too; they rent boats from Indonesia and head toward Australia. This is a transnational organized crime and there is also the issue of human trafficking that has involved many countries. Policies to fight this case vary, and for humanitarian reasons, Indonesia sometimes helps them; but Australia deports these boats and forces them to return home. I wish Iran could participate in the Bali Process. Iran may be a transit path for some countries and human trafficking might happen in it, too. For a number of times, however, we held fruitful meetings with Australian officials and spoke about immigration issues and we hope these talks will continue with Iran being a member of it.
Considering the good relations Indonesia has with Iran and Saudi Arabia, does it have enough potentials to mediate between Iran and Saudi Arabia or even between Qatar and Saudi Arabia?
Since 2016 when tensions escalated between Iran and Saudi Arabia, Indonesia’s Foreign Minister, Mrs. Retno Marsudi came to Iran and talked to Dr. Zarif before her trip to Saudi Arabia and expressed her readiness for mediating and solving the problem. His Excellency, Mr. Zarif agreed to that; but a bilateral consent is necessary for mediating purposes and Indonesia cannot pressure only one side for it.
Indonesia’s standpoint has always been friendly and supported Iran and whenever statements were made, it has adopted a friendly approach toward Iran and all neighboring countries expressing its readiness to intercede and resolve the problem.
It was the same about the tensions between Qatar and Saudi Arabia, and Indonesia once again voiced its readiness to intercede between the two countries if possible. Indonesia does not want to see the demise of security, solidarity or stability in other countries. We hope for this problem to solve with the cooperation and unity among the neighboring countries. For mediating and finding appropriate solutions, all neighboring countries should be unified.