Ever since the opening of diplomatic relations in 1953, the Indonesian-German bilateral relations have proceeded on positive and on friendly terms. This has been indicated among others on several occasions by the exchange of visits by senior officials of both countries as well as by intensive dialogues which contribute to deepen the traditional relations of the two countries.

President Abdurrahman Wahid, accompanied by the Coordinating Minister for Economy and Finance, Kwik Kian Gie, and the Minister of Foreign Affairs, Alwi Shihab, has visited Chancellor Gerhard Schröder (SPD) and President Johannes Rau (SPD) in February 2000. Other senior officials, including the Chairman of the People's Consultative Assembly (MPR), Amien Rais, and the President of the People's Representative Assembly (DPR), Akbar Tandjung, have also visited Berlin upon invitation by the Friedrich-Ebert-Foundation (SPD) and the Konrad-Adenauer-Foundation (CDU) respectively. Conversely, the German side has reciprocated by the visit of President Johannes Rau to Indonesia from 19-22 February 2001. The meeting which took place in Jakarta on that occasion is a third of its kind between the two heads of state following the first in Berlin (2000) and in Davos, Switzerland, in February 2000 during the World Economic Forum. Minister of Foreign Affairs Joschka Fischer has paid a return visit to Jakarta in November 2000.

During the period of transition to democracy in Indonesia, the German government has, like many other countries, actively rendered technical support for decentralization process and the drafting of national electoral and political party laws. Close bilateral cooperation between the two countries was further demonstrated by the involvement of Germany and Indonesia in a number of international fora like the United Nations as well as within the framework of ASEAN-EU dialogue and ASEM. Moreover, the heads of state of the two countries have assumed patronship of a research project to deepen the understanding between the Islamic and the Western cultures.

Economic Relations

The Indonesian-Germany relations continue to develop in a very conducive climate manifested by the keen attention of the German side to further support the development efforts for the national economy of Indonesia. This is visible for instance through the support of the Bundesbank as the advisor to the government of Indonesia in drafting the banking law and to draw up the anti-monopoly regulations and also through the commitments made by the German government during the 10th CGI meeting held in October 2000 in Tokyo.
With respect to investment, the German government supports and promotes through relevant channels the German entrepreneurs and investors to maintaining their interest and attention for Indonesia. The exhibition "Technogerma" held in March 1999 in Jakarta as well as the German-Indonesia Forum further manifests this trend. Moreover, Indonesia is also active to promote the investment potentials in the country through multilateral fora, for instance the ASEAN Joint Investment Promotion held in May 2000.

Trade

The Indonesian-German trade relation is based on the trade agreeement of 22 April 1953. During the last six years (1994 - 1999), the volume of the Indonesian-German trade has always indicated a deficit for Indonesia, as the table below shows : Volume of Indonesian-German non-oil and gas export and import (in thousand US $)

Source : Federal Statistical Office

Financial Aid through IGGI and CGI

The economic cooperation within the Indonesian-German bilateral relations was initiated in the development sector begun in the year 1967 through the forum of donor countries, the Inter-Governmental Group on Indonesia (IGGI) which was succeeded in 1992 by the Consultative Group on Indonesia (CGI) comprising 19 countries and 14 international bodies. Ever since its inception, Germany ranks among one of the most important donor countries.
The German pledge from 1992 to 1994 showed constant increase. After a minor decrease in 1995 due to a national economic downturn, it picked up again in 1996. In 1998, Germany stood second after Japan as a donor, with the pledged amount of US $ 300 million. In 1999, however, the German pledge experienced a drastic reduction reaching only US $ 39,7 million, slipping to fourth place after Japan (US $ 1,200 million), USA (US $ 184,5 million) and Australia (US $ 78 million). In 2000, during the CGI-10 the German pledge amount of US $ 19,6.

German pledges during the CGI meetings :

Source : Office of the Coordinating Minister for Economic Affairs

Investment

In the investment sector, the volume reached US $ 9.829,9 million between 1967 and 2000, composed of 183 projects (data from BPM and PBUMN). The sectors involved by the German entrerpreneurs include the electronic, manufacturing, machine and machine tools, packing, food processing, plastic, pharmceutics, glass and metal industries.
Based on the data from BPM and PBUMN, volume of foreign direct investment from Germany shows annual fluctuation, as the table below indicates :

In the year 2000, as the political and economic conditions in Indonesia began to improve, foreign investors, including from Germany, started to re-invest in the country. Many entrepreneurs welcomed the reform measures introduced by the new cabinet under President Abdurrahman Wahid, emphasizing their hope for more clarity and transparency of the legal system protecting foreign investors. One of the measures in this respect include the introduction of the banking and anti-monopoly laws as well as attractive facilities and incentives for foreign investors.

Economic Cooperation

Within the frameworks of the efforts to deepen the economic relations between Indonesia and Germany, the trade fair "Technogerma" was held in Jakarta from 1 - 7 March 1999. This fair amply demostrated the high degree of attention and confidence of the German private sector in the economic potential of Indonesia although the country was still in the grips of the econmic crisis. A similar fair was also held in 1979. The two countries also agreed to form the bilateral forum for economic and technical cooperation, the German-Indonesia Forum (GIF), of which the fifth meeting was held in Berlin ini January 29, 2001. Agreement of both parties are set in the Joint Communique.

German Aid Towards Indonesia in Overcoming Natural Disasters

The geographic constellation of Indonesia prone to natural disasters requires special attention in controlling the damages. The natural disasters which occured so far that still need to be tended to are the forest fire and earthquakes. They both require a large budget and are inter-related in the efforts for regeneration. Forest Fire In accordance with the results of the meeting between ASEAN and the European Commission in the environmental sector held in November 1999 in Brussels, the European Commission agreed to send a mission to set up a project to combat the forest fire in Indonesia. Drinking Water Project in Bengkulu The most recent earthquake disaster in Bengkulu also damaged a drinking water facility. This facility was installed by the German government through KFW (Kreditanstalt für Wiederaufbau using the budget appropriated for development aid.