China and Her Love For Celebes

“Analyzing Diverse China Strategic Development Project To Enhance Economic Development in Sulawesi Island”

Written by Samuel G. J. Pasaribu | Edited by Caesar Leonardo

China has considered Indonesia as an important development partner as it has embedded half of its investment in Celebes Island. Top-tier Chinese developers and entrepreneurs alongside Indonesia’s provincial government have established multiple Memorandum of Understanding (MoU), agenda to execute multiple mega infrastructure projects and partnership to implement the aforementioned investment in this region (Hasanuddin,2019). Not only for provincial government projects, China has also granted multiple Indonesia Strategic Development Plan ( Proyek Strategis Nasional) in this island.

Examining the Northern part of Sulawesi, Indonesia government has reached a consensus with the Chinese based on its offered partnerships in developing this particular province. Tourism development in Pal Beach, Likupang, Tanjung Pulisan, Minahasa; Bitung international sea port project , Bitung industrial park, and North Sulawesi toll road are the projects which will be incorporated between both private and government developer companies from China and Indonesia in the future .

Moving to the Central Sulawesi, the tangible development of Morowali Industrial park and the ratification on China First Heavy Industries (CFHI) Co Ltd investment of Rp 120 trillion in Palu Special Economic Region (Kawasan Ekonomi Khusus) have proven deeper attention from Chinese intense investments in this region. Alongside with other strategic development projects that are currently being issued, Chinese investment plans such as Palu tourism development, Palu-Parigi road infrastructure, Morowali smelter development and Palu seaport project has become the future Chinese investment in Indonesia (Peraturan Presiden,2017). Other than that, similar investment plans also have been established to support the development program of West Sulawesi, expecting the Chinese involvements within the infrastructure project such as building dam and irrigation system, road access, and state owned apartments in the region

Southeast Sulawesi has also witnessed Chinese mega investment projects through the existence of companies such as PT Virtue Dragon Nickel Industry (VDNI) dan PT Obsidian Stainless Steel, generating the mining industry to tangibly contribute for the local economic development. Konawe Smelter in this region has also been built from Indonesia cooperation with various foreign countries, including China. In the future, it’s more likely for China to continuously pour its investment on various infrastructure projects in the province such as Pelosika Dam, and Konawe Industrial park.

Far in the southern part of this region, South Sulawesi, the Chinese have also invested in another nickel smelter, the Bantaeng Industrial Park — in enhancing the added value of nickel as one of the natural resource commodities in Sulawesi island (Abdiwan, 2019). Future Chinese engagements in Takalar Integrated Industrial Park, Makassar New Port, Railway, and Tourism development are also expected to generate the economic gains of the aforementioned activity to Indonesia, especially for local economic development.

Chinese investment in Sulawesi is expected to bring Indonesia especially the region closer — as an integrated part of the Global Production Network. For instance the dominant Smelter development projects in Sulawesi could be functioned to enhance the added value of the mined natural resource commodities as part of the production process, while infrastructure projects such as the development of railway and road access initiated in this region would integrate the distribution chain of the product. These engagements have leaned more to the business activity for local economic development which would impact the amelioration of the people consumption capacity in the region. Thus Chinese investment could be considered as something crucial as Indonesia encountered limitations on its state budget (APBN) allocated for infrastructure developments — especially to acknowledge the fact that the state budget is more likely to suffer in continual deficit growth due to current predicaments (Asmara,2020). In this scenario the Chinese Foreign Direct Investment in Sulawesi would be a breath of fresh air for Indonesia’s economic development.

References

Hasanuddin, 2019. Dubes Cina Sebut Setengah Investasinya Ada Di Sulawesi. [online] Antara News Makassar. Available at: <https://makassar.antaranews.com/berita/107174/dubes-cina-sebut-setengah-investasinya-ada-di-sulawesi> [Accessed 4 May 2020].

Peraturan Presiden Republik Indonesia, 2017. Peraturan Presiden Republik Indonesia No 58 Tahun 2017. Presiden Republik Indonesia.

Asmara, C., 2020. Defisit APBN 2020 Bisa Terkerek Sampai 2,5% PDB. [online] CNBC Indonesia. Available at: <https://www.cnbcindonesia.com/news/20200309183550-4-143586/defisit-apbn-2020-bisa-terkerek-sampai-25-pdb> [Accessed 4 May 2020].

Abdiwan, 2019. Gubernur Sulsel Resmikan Smelter Nikel Investor China Di Bantaeng — Tribun Timur. [online] Tribun Timur. Available at: <https://makassar.tribunnews.com/2019/01/26/gubernur-sulsel-akhirnya-resmikan-smelter-nikel-investor-china-di-bantaeng> [Accessed 4 May 2020].

SABRI UGM is an overseas chapter to SABRI Tsinghua University established in Universitas Gadjah Mada (Yogyakarta, Indonesia).