France - Indonesia

Lagarde first French minister to visit Indonesia since 1997

Reuters/Christian Hartmann

French Economy Minister Christine Lagarde started a two-day visit to Indonesia Thursday – the first by a French minister since 1997 when authoritarian ruler Suharto was in power. France, which has concentrated on trade with China and India, holds a little over one per cent share of the Indonesian market.

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“It’s really time that France take an interest in Indonesia, which has for a long time been a victim of Paris’s fixation with China,” said Philippe Courroyan, France’s trade representative in Jakarta.

About 40 business leaders will accompany the minister, among them representatives of satellite launchers Arianespace and energy companies Total and GDF Suez.

Although a few French companies, including Total and supermarket giant Carrefour, are doing brisk business there, France does little business with the world’s fourth most populous country.

An Asian tiger which suffered in the 1997 economic crisis but enjoyed 6.1 per cent growth in 2010, Indonesia holds the presidency of the Asean regional bloc this year.

France’s market share is just 1.2 per cent, apart from hydrocarbons. Trade between the two countries in 2010 hit 2.4 billion euros – a rise of 16 per cent while Indonesia’s overall foreign trade soared 38 per cent.

A number of French companies pulled out after the ’97 crisis and have not returned. Today Chinese, South Korean, Japanese and Indian businesses are vying for infrastructure and mining contracts.

Cosmetics giant L’Oréal is to open a factory, which will be one of its biggest, at the end of this year in an effort to reach the growing Indonesian middle class.

But there is a downside. Potential investors often complain of widespread corruption, excessive business legislation, nationalist agitation and a lack of qualified personnel.

US mining company Freeport McMoRan has faced charges of complicity with abuses by the Indonesian military in Papua province, where it runs the world's largest gold mine, and before that in Aceh.

Lagarde was scheduled to meet her counterpart, Hatta Rajasa, and Vice-President Boediono.

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