Doha Looks to Southeast Asia

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Doha Looks to Southeast Asia

Qatar and Indonesia take advantage of trade and investment opportunities to strengthen regional ties.

There is an increasing tendency amongst Persian Gulf states to strengthen ties with the rapidly growing economies of Southeast Asia. Recent Qatari-Indonesian relations exemplify this trend.

Although not widely reported, Qatar and Indonesia have been working steadily to strengthen and expand their cooperation beyond the political and diplomatic spheres. The two countries established diplomatic relations in 1976. Since then, there have been a series of diplomatic visits between Jakarta and Doha. Qatari Emir Sheikh Hamad bin Khalifa Al Thani visited Indonesia in 2009, and the Indonesian President Susilo Bambang Yudhoyono went to Doha in 2006.

Despite a relative lack of publicity, Indonesia enjoys increasingly cordial ties with Qatar. Last year, it was reported that the trade volume between Indonesia and Qatar reached $1.3 billion between January and October 2013, a nine percent increase over the same period in 2012. This number indicates that there has been a steady expansion of the trade partnership between the two countries in the past year.

Indonesia is attempting to increase exports to Qatar in infrastructure-related materials, including cement, nails, and steel. Qatar imports other products such as petrochemicals, electronics and furniture from Jakarta. While food items are also imported, it is only in small volumes.

Qatar’s increased interest in Indonesia is manifested in its investments. Qatar Holdings has set up an Indonesian Fund worth $1 billion, and Qatar National Bank has also reportedly made a $180 million investment in Bank Kesawan, re-branding the bank QNB Kesawan. Today, the bank has a number of branches across Indonesia.

In addition, the Qatari government has reportedly set up another investment fund worth around $1 billion in Indonesia, focusing primarily on mineral resources and infrastructure projects. As Indonesia is currently pursuing its “Masterplan: Acceleration and Expansion of Indonesia Economic Development 2011-2015,” which has identified Sumatra, among other areas,  as a center for processing the country’s natural resources and energy reserves, it could be a major opportunity for Qatar to strengthen its partnership in the downstream oil and natural gas processing sectors. Considering this opportunity, Qatar Petrochemical Company recently opened a representative office in Jakarta.

However, capital is not flowing in only one direction. As reported by the Jakarta Post, several Indonesian enterprises have also made significant investments in Qatar. Indonesia’s state oil company Pertamina, for example, operates Qatar’s Sector-3 oil and gas block along with companies from Japan and Germany. Additionally, a number of infrastructure companies such as PT Adhi Karya and PT Asia Building Products have also won contracts for projects in Qatar.

In the runup to the FIFA World Cup in 2022, particularly as the Qatari government plans extensive infrastructure construction, the expected number of Indonesian companies and workers could rise as demand increases. Qatar appears to have been interested in seeking Indonesian manpower in recent years, both professional and non-professional. In 2010, a memorandum of understanding was signed between the two countries for Indonesian medical professionals (mainly nurses) to be recruited in Qatar.

To facilitate this rapidly growing partnership, last year Qatar’s Civil Aviation Authority signed a memorandum of understanding with Indonesia’s Ministry of Transportation to increase the number of flights by Qatar Airways to several cities in Indonesia. This initiative could contribute to deepening contacts among investors, businessmen, and politicians.

The bilateral relationship extends to other areas. Qatar is becoming one of Indonesia’s more prominent Arab donors, with Qatar Charity, the country’s non-governmental charity organization, establishing a prominent presence. Other exchanges are taking place in the realm of education and exhibitions.

Looking ahead, the burgeoning ties between Qatar and Indonesia could continue to grow in the coming years. Even though it is Southeast Asia’s largest economy, Indonesia still needs to attract billions of dollars in investment to improve its fledgling economy, help boost growth, and slash unemployment presently around ten percent of the workforce. As a G20 member from Southeast Asia, Indonesia is viewed by Doha as a promising venue for boosting investment. As Qatar’s relations with some of its neighbors becomes unstable, Southeast Asia could become a prudent alternative.

Muhammad Zulfikar Rakhmat has lived in the Middle East for seven years. He holds a B.A. in International Affairs from Qatar University and is currently a research assistant at the same university.