Lesley Wroughton

July 12, 2010

Former Finance Minister Sri Mulyani Indrawati, who built her name fighting graft in Indonesia, now wants to do the same at the World Bank without choking development.

Sri Mulyani, 47, said her experiences at home taught her how to reform an emerging market economy and when to seek outside help — skills that will serve her well as the World Bank’s newest managing director.

In 2008, Forbes Magazine named her one of the world’s most powerful women due to her hard-driving reforms that included firing corrupt officials and conducting secret raids on staff to keep them honest.

Her background in Asia is vital at the Washington-based institution looking for new ways to be more relevant to emerging economies that may not need its cash but still have huge development challenges and widespread poverty.

“It’s not always easy,” Sri Mulyani told a small group of journalists in Washington recently as she reflected on her own battle to tackle Indonesia’s deep-rooted corruption.

She will oversee East Asia and the Pacific, the Middle East and North Africa, and Latin America and the Caribbean, as well as governance and corruption.

She knows well that success as a reformer can carry a political price. In Indonesia, Sri Mulyani faced strong opposition from the entrenched political and business elite that dated back to the rule of President Suharto.

Her decision to resign as finance minister in May followed pressure from enemies over the reforms and a controversial decision to bail out Bank Century during the recent financial crisis.

A legislative inquiry failed to find any evidence of corruption in the bailout, and the president backed her decision.

Sri Mulyani’s reform efforts included an overhaul of the tax and customs offices, traditional hotbeds of corruption, to increase state revenues and crack down on tax evaders.

She also moved funding from ministries toward social spending such as community programs, health insurance and school funding.

In addition, she implemented merit-based incentives for civil servants that included hiring practices and pay hikes to reduce the temptation to accept bribes.

Sri Mulyani said that trying to clean up corrupt and opaque systems by putting in place too many checks and balances could slow development.

The World Bank has often been criticized for slowing the flow of funds as it tries to stamp out graft.

“A lot of work needs to be done in terms of how you are going to design the right decision-making process in the Bank,” Sri Mulyani said, “ that will make sure good governance and anticorruption should not be perceived as a burden” for client countries.

She said the World Bank’s knowledge and expertise were its strongest assets for helping emerging countries.

World Bank advice was important to her own efforts to reform the Finance Ministry, and its emergency loans were critical in stabilizing the economy during 1997-98 Asian financial crisis.

Sri Mulyani can also draw from Indonesia’s efforts to halt greenhouse gas emission from deforestation, and the financial incentives to be gained from protecting tropical forests.

Indonesia is the world’s third-biggest emitter of greenhouse gases due to deforestation, ranking only behind the vast industrial pollution of the United States and China.

The World Bank has helped develop a fund that allows developing countries to earn money by preserving its tropical forests, which absorb carbon dioxide from the atmosphere.

Sri Mulyani said the Bank needed to better integrate climate change strategies into mainstream lending. In particular it should help countries to adapt to changes in weather, farming, water supply and other resources.

“Funding, mitigation and adaptation are not separate issues for development,” she said. “We must say countries have to adapt because the threat of the change in climate is so obvious.”

Source: Jakarta Globe

Reuters

Most global markets rose on Monday as investors were encouraged by the Group of 20 rich and developing nations’ pledge to reduce budget deficits.

“Nothing earth-shattering from the G-20 meeting, but policy makers have done a rather elegant job at containing the underlying conflict on growth versus fiscal consolidation that had pitted in particular Germany against the United States, but also split the euro zone down the middle,” said Unicredit chief economist Marco Annunziata.

Ben Potter, resdearch analyst at IG Markets, called the progress on global deficit reduction “encouraging.”

European markets broke a four-day run of losses. Britain’s FTSE 100 stock index was up 0.4 percent while Germany’s DAX was 1.4 percent higher. France’s CAC-40 was up 1.6 percent.

In New York, Wall Street investors started the week slightly downbeat after a report signaled that consumers remained cautious about spending.

The modest day came ahead of a big week of US economic data, including the government’s monthly jobs report on Friday. Investors will want to see private sector job growth because any signs of hiring add confidence that the economy is improving.

In Asia, Hong Kong’s Hang Seng index climbed 0.2 percent and benchmarks in South Korea, Taiwan, India and Singapore also posted mild gains. Elsewhere, Japan’s Nikkei 225 stock average fell 0.3 percent as a strong yen weakened exporters.

Australia’s S&P/ASX 200 lost 0.7 percent and the Shanghai Composite index shed 0.7.

The dollar gained to 89.42 yen from 89.33 late Friday. The euro fell to $1.2326 from $1.2371. Benchmark crude for August delivery was down 27 cents at $78.58 a barrel on the Nymex.

AP, JG

Wary of slamming on the stimulus brakes too quickly but shaken by the European debt crisis, world leaders pledged Sunday to reduce government deficits in richer countries in half by 2013, with wiggle room to meet the goal.

Leaders of 20 major industrial and developing countries generally sided with cutting spending and raising taxes, despite warnings from President Barack Obama that too much austerity too quickly could choke off the global recovery.

“Serious challenges remain,” they cautioned in a closing statement. “While growth is returning, the recovery is uneven and fragile, unemployment in many countries remains at unacceptable levels, and the social impact of the crisis is still widely felt,” according to the document from the Group of 20 major industrial and developing nations.

Obama told a news conference he was satisfied with the outcome, saying he recognized that countries had to proceed at their own pace in either emphasizing growth or budget austerity.

“We can’t all rush to the exits at the same time,” Obama said after three days of economic summitry.

Summit participants navigated a careful course between Obama’s emphasis on growth and fellow leaders such as German Chancellor Angela Merkel who advocated spending cuts and even tax increases.

“Advanced economies have committed to fiscal plans that will at least halve deficits by 2013 and stabilize or reduce government debt-to-GDP ratios by 2016,” according to the statement. The gross domestic product, or GDP, measures the value of all goods and services, and is considered the best gauge of economic health.

At the same time, the statement called for following through on “existing stimulus plans,” heeding Obama’s concerns.

Japan was given an exemption from meeting the debt targets because of years of a stagnant economy, and the fact that its huge debt is largely owned by Japanese and not overseas investors.

Canadian Prime Minister Stephen Harper, the summit host, told reporters that deficit reduction “is not an end in itself” and that there is “an ongoing role for stimulus in the short term.”

As the summit wrapped up, conditions on the streets of Canada’s biggest city remained tense.

Police, responding more aggressively than the day before, raided a university campus and rounded up protesters in an effort to quell further violence after youths rampaged through the city the night before, smashing windows and torching police cruisers. Police said they arrested more than 600 demonstrators.

Harper blamed “thugs” for the violence and suggested the destruction and fires on the streets justified the $900 million that Canada spent for summit security.

World leaders also took note of the devastating oil spill in the Gulf of Mexico in their statement, which recognized “the need to share best practices to protect the marine environment, prevent accidents … and deal with their consequences.”

The April 20 explosion on the BP-leased Deepwater Horizon rig unleashed the worst offshore oil spill in U.S. history. BP is London-based and the disaster has contributed to strains between the U.S. and Britain.

Britain’s new conservative prime minister, David Cameron, told reporters BP was working hard to cap the well, “clean up the mess” and compensate victims. At the same time, “what we all want is for this important company to be strong and stable for the future,” he said.

The G-20 statement limits the deficit-reduction goal to the most industrialized nations and offers governments flexibility on when to start balancing their books.

French President Nicolas Sarkozy pointed out that “France has made even more stringent promises to its European partners on deficit-cutting.”

Asked if summits were necessary, Sarkozy admitted that they can be exhausting. “We end these summits empty, tired, but it’s our duty to participate,” he said.

European countries, in particular, have been rattled by the near-default of Greece on its government debt.

The document doesn’t endorse a bank tax advocated by Europe and the U.S. to set up a fund to pay for future bailouts. Canada, Australia and Japan, whose banks did not fail in the crisis, oppose the levy.

Instead, it says all countries should make sure taxpayers are not stuck with the bill when banks fail, and leaves it up to individual countries to decide how they want to do that.

Canada’s Harper urged leaders to “send a clear message that as our stimulus plans expire, we will focus on getting our fiscal houses in order.” He said global economies needed to walk a “tightrope” between deficit spending this year, ensuring the fragile recovery continues and then switching to deficit reduction programs.

The G-20 includes the world’s major industrial countries – the United States, Japan, Germany, France, Britain, Canada, Italy and Russia – plus major developing nations such as China, India and Brazil.

Some countries will find it more difficult than others to meet the new deficit targets.

The United States ran a record deficit of $1.42 trillion last year, or 10 percent of its GDP. Private economists expect the deficit will decline only slightly to $1.3 trillion this year, which would amount to 9 percent of GDP.

Obama’s budget plan from February would cut the deficit in half by 2012, as a percentage of GDP. He’s also named a commission to examine how to trim the deficit further, to 3 percent of GDP – a level economists generally view as sustainable.

Republicans have suggested it is unlikely that Obama will be able to meet his own deficit-reduction targets and say the White House has yet to put forward a credible plan. And critics complain that the deficit commission Obama set lacks the power to make Congress consider its recommendations.

Yet, the U.S. stands a generally good chance of meeting the targets, assuming a strengthening economy between now and then.

Britain is in worse shape. Its deficit this year is over 10 percent of GDP in 2010.

“For European countries with high budget deficits, especially for the U.K. with the highest budget deficit in the G-20, we have got to make our contribution to that sustainable growth by showing the world that we can live within our means,” said British Treasury chief George Osborne. In a BBC interview, Osborne said that means stiff cuts in government spending.

Britain last week put forward a tough emergency budget, raising taxes and cutting spending by levels not seen since World War II.

On the other end of the spectrum, Canada’s federal budget deficit will be less than 3 percent of GDP this year. Ottawa’s plan aims to balance the budget by 2014-15.

As he opened the final session, Harper boasted that Toronto was “home of the most solid financial sector in the world.” Its banking system was barely affected by the financial meltdown of 2008.

The deficit targets that the G-20 countries adopted had been outlined by Harper in a letter he sent to fellow leaders this month. But there were disagreements over them right through a dinner on Saturday night.

Treasury Secretary Timothy Geithner met Sunday for the first time with Japanese Finance Minister Yoshihiko Noda and stressed the importance of the G-20′s call for strengthening rules for banks to set aside money as cushions against potential losses, according to a Treasury Department official.

Obama had urged the G-20 countries to avoid the costly mistake made during the 1930s, when countries reduced government support too quickly and ended up prolonging the Great Depression.

The joint statement made only a passing reference to the need for “greater exchange rate flexibility” and made no specific mention of China’s recent announcement that it would allow its exchange rate to rise against the dollar.

That was a victory for the Asian superpower, which has repeatedly said it did not want to be lectured by other powers on exchange rates.

However, Obama, at his news conference, said: “The United States welcomes China’s decision to allow its currency to appreciate in response to market forces. We will be watching very closely in the months ahead.”

The Associated Press, Toronto | Mon, 06/28/2010 9:01 AM | Headline

June 24, 2010

Indonesian President Susilo Bambang Yudhoyono on Thursday welcomed new Australian Prime Minister Julia Gillard after she ousted Kevin Rudd in a party leadership challenge.

“President Yudhoyono has known new Prime Minister Julia Gillard since he visited Australia [in March]. The president will continue to work with the new prime minister,” Yudhoyono’s spokesman told reporters.

“We’re arranging a telephone conversation between the president and the prime minister.”

As he left Indonesia to attend a G20 summit in Canada, the president known as “SBY” also spoke of his friendship with Rudd.

“President Yudhoyono said in a meeting today that he really appreciated the service and friendship that Kevin Rudd has shown Indonesia in building the Australia-Indonesia bilateral relationship,” a spokesman said.

Australia’s first female leader was elected unopposed in a Labor Party ballot early Thursday after factional support swung away from Rudd, a Chinese-speaking former diplomat.

Indonesia-Australia ties have been fraught with difficulties over the years but both neighbours see the relationship as strategic, with implications for regional security and economic development.

Agence France-Presse

Source: The Jakarta Globe

June 19, 2010

Washington (CNN) — President Barack Obama welcomed Saturday’s news that China’s central bank will allow its national currency to float ahead of the G-20 summit in Toronto, Canada, next week.

In a statement issued Saturday, Obama praised China’s decision to increase the flexibility of its exchange rate, which officials hope will help balance China’s trade deficit with the United States and Europe.

“China’s decision to increase the flexibility … is a constructive step that can help safeguard the recovery and contribute to a more balanced global economy,” the president said in the statement.

“I look forward to discussing these and other issues at the G-20 Summit in Toronto next weekend,” he said.

Will currency move help U.S.-China relations?

China’s official Xinhua news agency said The People’s Bank of China — China’s central bank — announced Saturday it would push further its rate reform to make the the yuan, also known as the renminbi, more flexible. The move could appease international criticism against China’s weak exchange rate, which has created trade imbalances between Western nations and China.

The decision was made in view of the recent economic situation and financial market developments at home and abroad, and the balance of payments (BOP) situation in China,” Xinhua quoted the Central Bank’s spokesperson.

“The stability of the RMB (renminbi) exchange rate has played an important role in mitigating the crisis’ impact, contributing significantly to Asian and global recovery, and demonstrating China’s efforts in promoting global rebalancing,” he said.

The International Monetary Fund’s managing director, Dominique Strauss-Kahn, released a statement on China’s move, which he described as a “welcome development.”

“A stronger renminbi is in line with findings of the G-20 Mutual Assessment Process, to be presented in Toronto next week, and will help increase Chinese household income and provide the incentives necessary to reorient investment toward industries that serve the Chinese consumer,” he said.

China’s move comes ahead of the Group of 20 and the Group of 8 meetings in Canada’s Province of Ontario scheduled next week, with finance ministers and central bank governors of major trading powers will discuss trade issues and the world financial crisis.

Representatives of several industrialized nations including India, Brazil, the United States and European countries have previously asked China to allow its currency to float.

Source: CNN.Com

Japan’s incoming prime minister was set to name his new Cabinet on Tuesday, keeping key members in place as the ruling party looks to revive the moribund economy and restore voter confidence ahead of next month’s elections after its former leader abruptly quit last week.

Prime Minister-elect Naoto Kan will maintain the bulk of the existing administration, including the foreign and defense ministers, according to an official from the ruling Democratic Party of Japan, who asked not to be identified because he isn’t an official spokesman.

Those posts are especially important given increased tensions in the region after the alleged sinking of a South Korean patrol ship by a North Korean submarine two months ago, as well as Tokyo’s continuing negotiations over a controversial U.S. Marine base on the southern island of Okinawa.

The leadership handover also occurs in the middle of a parliamentary session, with upper house elections likely to be held sometime in July.

The plain-spoken Kan, known for his sometimes fiery temper and for exposing a government coverup of HIV-tainted blood products in the mid-1990s, was elected prime minister in a parliamentary vote last week to replace Yukio Hatoyama, who stepped down last week amid voter dismay in his broken campaign promises and perceived weakness as a leader.

Japan’s sixth prime minister in four years, Kan was to be officially be sworn in later Tuesday in a ceremony with Emperor Akihito.

Kan’s reputation and common roots – in contrast to several of the previous leaders who all hailed from politically elite families – could boost the DPJ’s fortunes, analysts say.

“What the Japanese public wants is a government that solves problems for them. They want a government that works for them, not lofty promises,” said Sheila Smith, a senior fellow at Council on Foreign Affairs in Washington.

Recent polls show that the Democrats have already won back a measure of voter trust.

A poll published Tuesday in the national Sankei newspaper showed that 57 percent of recipients have high expectations for the new government, and support for the party has recovered to 31 percent, versus 18 percent from before Hatoyama stepped down.

The Sankei survey was conducted through random telephone interviews of 1,000 eligible voters. It did not give a margin of error, but that sampling size would normally have a margin of about 5 percentage points.

The Associated Press, Tokyo | Tue, 06/08/2010 11:46 AM | Headlines

Postponed Obama visit is a reminder of the gap between good intentions and actual outcomes

by Simon Tay

Updated 10:55 AM Jun 07, 2010

United States President Barack Obama’s decision to postpone his trip to Indonesia and Australia because of the oil pollution on the Louisiana coast is understandable but not without consequence.

This is the third time he has postponed his visit to Indonesia and this sends a signal not just for bilateral ties but for the wider Asia-US engagement.

For Indonesia, the government has expressed understanding but the popular sentiment is one of disappointment. This should not be overstated. Whenever Mr Obama does finally turn up, it could well be that his presence will evoke great interest and even adulation among many millions of Indonesians.

But Indonesian public opinion is fickle and equanimity can sometimes be a mask.

A window of opportunity is open still, but not indefinitely. It is important to see that a visit to Indonesia is not primarily about Mr Obama returning to where he spent some years of his youth. Far more important than nostalgia is the prospect for the future with this pivotal country in South-east Asia.

Indonesia has transformed itself since the fall of Suharto but the relationship with the US has lagged. A visit by Mr Obama could shore up American soft power in the world’s largest Muslim society, and further encourage the country’s vibrant, young democracy.

The visit can finally put military-to-military ties on a sound foundation. Entry for American exports and investment into the Indonesian economy – growing, stable and with a large potential market – can also be smoothed.

Just as his predecessor built ties with India, Mr Obama has the opportunity to transform ties with Indonesia. Such a new relationship would have implications for the wider region.

Indonesia is the centre of gravity in the Association of South-east Asia Nations (Asean), which includes US allies and friends like Thailand, the Philippines and Singapore. Asean is the hub for the interlacing free-trade agreements and meetings for the wider Asia. Whatever the confusion of acronyms, and despite the fact there are richer and larger economies and powers, Asean is ever present and has influence and acceptability.

The Obama administration has understood this and has revitalised ties with Asean.

The US-Asean Summit, which was inaugurated in 2009 with Mr Obama, can be developed to the benefit of both. At the very time that Mr Obama postponed his trip, US Defence Secretary Robert Gates was in Singapore for a regional security dialogue. Secretary of State Hillary Clinton is also expected to visit in July, making her fourth visit to South-east Asia since coming into office.

Even as US-Asean ties strengthen, both must consider how best to square this with relations that each has with giants China and India. The idea for a new Asia-Pacific Community has been talked about by Australian Premier Kevin Rudd, although without specific details about who to include and how the meeting would proceed.

Some more specifically suggest expanding the East Asian Summit to bring in the US. This is an annual meeting that Asean hosts and includes China, Japan, South Korea and India, as well as Australia and New Zealand. An alternative mode being considered is for an Asean+8 meeting which would include the US and the other same countries, but be less often.

In all this, the current postponement is a reminder of the gap between good intentions and actual outcomes.

There should be no doubt that Mr Obama is sincere in wanting to visit Indonesia and to strengthen ties with Asia as a whole. He understands the economic potential with Asia’s rise and the geo-political implications if the US is absent. Moreover, he seems predisposed to a multilateral process in which the US is a leader but need not dominate.

However, the American political reality that domestic issues trump foreign ventures is long standing.

What is new is that the US post-crisis agenda is even more demanding. This is because the White House has set a wide-ranging agenda of reform to follow up Mr Obama’s campaign promise of change.

It is also because the American public is restive whether about the current environmental emergency or events in Afghanistan. There is a new, post-crisis angst over the loss of jobs and diminished economic prospects in the world.

The US-Asia relationship must be rebalanced between good intentions and these realities. There is need. A rising Asia should not be left alone and needs to be engaged. But the US and its charismatic but pressured President cannot always be there.

Simon Tay is chairman of the Singapore Institute of International Affairs and co-chair of the Asia Society’s Global Council. His book, Asia Alone: The Dangerous Post Crisis Divide from America, will be released by John Wiley and Sons in the US for the Fall.

Source: Today Online

Dogged for being too calm in crisis, President Barack Obama unleashed frustration for all to see Friday, warning BP it had better do right by the people whose live it has wrecked.

The president’s third trek to the Gulf of Mexico was about the workers with no government titles, the shrimpers and the shopkeepers, the fishermen whose lives have been upended and are running out of people to blame.

Yet Obama’s trip was also about him.

He says it serves little substantive point to go around and yell – that people want results, not a show – but presidents face peril if they do not connect emotionally. As the crisis has dragged on – and his poll ratings have slipped – his words for BP’s leaders have grown sharper.

“I don’t want them nickel-and-diming people down here,” Obama said after his latest briefing on the oil response. He promised his government would look over BP’s shoulder to ensure it was paying out claims.

His visit amounted to one long I’m-on-your-side passage for reeling communities. Along that same line, he invited family members of the 11 workers killed when the BP rig blew up to visit the White House next Thursday. Press Secretary Robert Gibbs said the president had written to each of the families.

As for BP, Obama cast the oil company as a corporate giant interested in protecting its image with TV ads and its shareholders with bountiful dividends.

“I don’t want somebody else bearing the costs of those risks that they took,” Obama said. “I want to make sure that they’re paying for it.”

The president’s visit came as engineers with BP worked to settle a funnel-like cap over the deep-sea leak to try to collect some of the crude now fouling four sates. It was not clear how much oil was being captured, and some continued to flow, generating frightening photos of seabirds clogged in the muck.

The oil rig that exploded on April 20 has caused a massive, ongoing spill that is polluting the waters and shores of the Gulf states and consuming the attention of the president. Obama scrapped a trip to Indonesia and Australia to deal with it – no small international sacrifice, especially since he had already resorted to that move once before this year to finish a health care law.

Yet in unleashing his most fiery words yet about BP, Obama underscored his awkward situation: To fix the problem, he is reliant on the same people whose motives he now questions. The government is not equipped to handle the tricky, deepwater effort BP is leading to fix its gushing well.

From his briefing outside New Orleans, Obama bounded on a two-hour-plus motorcade drive to Grand Isle, a small barrier island, to hear from the people. The weather made the trip feel fittingly hard. A driving rain forced him to drop plans to travel by helicopter.

Along the way, he passed this roadside sign: “HELP US NOW!!”

At another spot, the side of a building had been adorned with a portrait of Obama reminiscent of his famous presidential campaign posters. Instead of “hope” or “change,” the words “what now?” were on his forehead.

In casual clothes, Obama went to a bait shop to talk to fishing industry workers about how the disastrous oil spill is affecting their business. The shop owner was there to meet him along with a shrimper, an oysterman, a marina owner and others.

Obama rolled up his sleeves and sat down at a table with the men, and they all dug into shrimp and corn on the cob. One by one, they told Obama their gut-wrenching stories, which he then related to reporters.

“Terry’s been shrimping out here for 45 years. Right now things are completely shut out,” the president said. “Floyd has oil seeping into these oyster beds.”

The mayor of Grand Isle, David Camardelle, choked up as he told of staying up nights worrying, “looking at the ceiling fan.”

“We don’t know what’s going to happen tomorrow,” Camardelle said. “I’m trying to keep Grand Isle alive.”

Obama later talked with other Grand Isle residents gathered near the bait shop, on the shore near some shrimp boats, promising them: “We’re not going to forget that this is a way of life.”

“Even when I’m not here, I’m thinking about you,” Obama said.

More than six weeks into the disaster, the president’s demeanor has come into question. The calm-in-crisis state that helped him win the presidency has seemed off in tone.

Just ahead of the Gulf visit, he declared himself furious at a situation that “is imperiling an entire way of life and an entire region for potentially years.” He criticized BP for not responding more quickly.

But polls show the public growing more negative toward the president’s own handling of the spill, and he was aiming to demonstrate he was staying on top of the situation Friday – without getting in the way. Obama visited the Gulf region twice in May, and this tour surely will not be his last.

“We’ll keep on coming back until we have dealt with an unprecedented crisis,” Obama promised.

Somewhere between 22 million gallons (83 million liters) and 47 million gallons (178 million liters) of crude oil have been disgorged into the Gulf since the Deepwater Horizon oil rig exploded on April 20, according to government estimates. Eleven workers were killed in the blast.

Obama’s administration on Thursday handed BP a $69 million bill for recovery costs to date – a figure sure to grow in the weeks and months ahead.

The World Congress of International Real Estate Federation ( FIABCI ) to be held in Bali will present speakers from throughout the globe. They will participate and serve as speakers in this great event from 24 to 28 May 2010.

The speakers are largely those who come from and own various professional and industrial backgrounds. They represent government officials, business people, excecutives of property, architecture, banking industry or tourism sector, most of whom  come from the US, Europe, Australia, China and Indonesia.

Lilian Budianto ,  The Jakarta Post ,  Jakarta   |  Fri, 04/09/2010 11:38 AM  |  World

China welcomes the expansion of the East Asia Summit (EAS) to include the US and Russia, but regional integration should remain driven by ASEAN+3 (APT), says the Chinese envoy.

Speaking to the media on Thursday, Chinese Ambassador to Indonesia Zhang Qiyue responded to Jakarta’s proposal to include the US and Russia in the EAS, which consists of 10 ASEAN members plus China, Japan, South Korea, India, Australia and New Zealand.

“We are quite open to new ideas and initiatives [to expand the EAS] but we already have the APT in place, which has more mature mechanisms and is working very well,” said Zhang.

“This should be further developed and at the same time we welcome other initiatives… because we think the cooperation framework of this region could be multi-tiered, considering there are lots of different issues to tackle.”

The APT, consists of the 10 ASEAN members plus China, Japan and South Korea, and is said to be the main success of ASEAN. APT has not only managed to create political stability after decades of historical hostilities between China, Japan and South Korea, but also established a currency swap arrangement providing US$120 billion for liquidity emergencies under the Chiang Mai Intiative Multilateralization.

“EAS is more for strategic dialogue and discussion; the APT is more for concrete steps for integration… We are still making a lot of efforts in making this whole area more tightly integrated,” said Zhang.

China has been looking to better integrate East Asian countries through a free trade zone among the APT members as well as in politics and security, including maritime security in the piracy-prone Malacca Straits.

Observers said Jakarta’s new move to include the US and Russia might be resisted by China because both powers have been at odds with each other, from trade disputes to human rights issues.

The absence of the US in the regional grouping amid the rise of China has prompted the enlargement of EAS although leaders in EAS have previously veered away from admitting new members, saying they did not want to make “a mini UN”.

Indonesia’s Foreign Minister Marty Natalegawa said the inclusion of the US and Russia was to prevent “a domination of a single power” inside the EAS.

When asked about the position of EAS in the integration of East Asia, Zhang said “I don’t want to say on which tier is the APT or EAS in the integration of East Asia but it is agreed that APT is more developed and established and we have to do further work on it.”

In the interview, Zhang said relations between Indonesia and China ties would go beyond bilateral cooperation as both share many similar views on international issues.

“We have worked very closely on issues of the UN, climate change, development of trade in the WTO, Middle East and Indonesia-China relations. Both of us are now member of G20 and we have very close contacts with the G20.”

Zhang said bilateral relations with Indonesia had been advancing well since the signing of the strategic partnership in 2005.

Indonesia and China will observe the historic 60th anniversary of diplomatic relations on April 13, which will be celebrated during the visit of Premier Wen Jiabao to Jakarta in late April.