Indonesia & Hungary: Bilateral Trade, Investment & Relations
Indonesian President Joko Widodo met Hungarian Prime Minister Viktor Orban in Jakarta on Monday (01/02) to discuss bilateral issues including trade and investment. High on the agenda was the topic of solar power. Reportedly, Hungary plans to invest USD $20 million for the construction of a 5 megawatt (MW) solar power plant in Central Tapanuli (North Sumatra). Other topics included the manufacturing sector, fishery sector, the digital economy, and the promotion of peace and stability.
Hungarian Prime Minister Orban did not come alone. He is joined by five cabinet ministers (foreign affairs and trade, agriculture, economy, national development, and higher education) as well as 47 Hungarian businessmen engaged in hospitality, energy, manufacturing, railway and finance. Hungary is an important trading partner of Indonesia. In 2015 total trade between both nations reached USD 103.4 billion. Indonesia had the "upper hand" in this relation with a USD $6.8 billion trade surplus.
Trade between Indonesia & Hungary:
| 2010 | 2011 | 2012 | 2013 | 2014 | 2015 | |
| Import into Indonesia (in billion USD) |
146.9 | 341.2 | 162.4 | 110.3 | 62.4 | 48.3 |
| Export to Hungary (in billion USD) |
73.9 | 97.2 | 60.8 | 91.2 | 86.9 | 55.1 |
| Balance (in billion USD) |
73.0 | 234.9 | 101.6 | 19.1 | 24.5 | 6.8 |
Source: Indonesian Trade Ministry
Regarding the USD $20 million solar power plant in North Sumatra, the next step would be that relevant ministers from both countries will meet to discuss further details. Indonesia will be represented by Minister of Energy and Mineral Resources Sudirman Said. When this meeting will take place has not been announced. The new solar power plant fits Indonesia's target to construct 5,000 MW of solar power capacity over the next five years.
Back home, Hungary uses only a limited amount of fossil fuels for power generation (whereas Indonesia's power generation is highly dependent on oil and coal). More than one-third of the Central European nation's electricity is produced by nuclear power (while it plans to raise the nuclear proportion of electricity to about 60 percent). Although it is generally not regarded a renewable energy source, nuclear power is a low carbon power generation source (although disasters at the nuclear plant can have far-reaching effects).
Hungarian Investment in Wheat Plantations in Indonesia
Meanwhile, Indonesian Agriculture Minister Amran Sulaiman requested Hungary to invest in wheat plantations in Indonesia. In Europe, Hungary is the largest wheat producer with an average production capacity of seven tons per hectare. Consumption of wheat has risen considerably in Indonesia in recent years as more and more Indonesians have added bread, porridge, Muesli, pancakes, cakes, doughnuts, breakfast cereals to their daily diet. Although Indonesia does not have the optimal climate for wheat production, it is possible to produce wheat at an altitude of about 400 meters above sea level.
Currently, Indonesia needs to import about 7 million tons of wheat per year to meet domestic demand. Sulaiman offered Hungarian Agriculture Minister Sandor Fazekas to export wheat to the Indonesian market, provided that the Hungarians offer more attractive rates than those that are being charged by Indonesia's current wheat suppliers (which include the USA, Australia, Canada, and Russia).
Besides wheat, Sulaiman also requested Hungarian investment into Indonesia to boost production of sugar, corn and beef. Regarding corn, both countries will cooperate (exchanging technology and knowledge) to boost corn production in Indonesia (starting with a test trial for the IPB3S-type of corn).
Water Management Project & Maritime Sector
Both countries are also in talks about a USD $36-million water management project that should improve the water supply in both the up- and downstream sectors. However, few details were released about this plan.
Hungary and Indonesia also agreed to cooperate in the maritime sector. Widodo and Orban signed a memorandum of understanding on fisheries and aquaculture, which includes fish farming.
Indonesia, the world's largest archipelago, has control over vast (fish-rich) seas and waters. As such, the nation already ranks among the largest producers in aquaculture worldwide. However, as in other sectors of the economy, the country is yet to tap the full potential of the fishery sector and optimize profitability.
Further Reading: Growth of Indonesia's Fishery Sector Outpacing Overall Economic Growth