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Taiwan Flexes Muscle With Deal to Develop Indonesian Island

  • Ralph Jennings

People shelter from the heat of sun in a refugee camp in Morotai, North Maluku, June 21, 2000.

People shelter from the heat of sun in a refugee camp in Morotai, North Maluku, June 21, 2000.

Taiwan has struggled increasingly for diplomatic recognition as its chief rival, China, becomes more powerful. Officials in Taipei say they have scored a major achievement by signing an agreement with Indonesia to develop the massive country’s northernmost island, called Morotai. Taiwanese companies are set to build an airport, a harbor and other hardware to make Morotai a tourism and fishing hub.

This first-of-a-kind deal for Taiwan to use the sparsely-populated tropical island fits with its mission to be seen around the world as an economic and humanitarian heavyweight. It vies for that recognition with China, which has used its much larger economy to leave Taiwan with just 23 diplomatic allies, compared to more than 170 for Beijing.

Andrew Huang, a strategic studies professor at Tamkang University in Taiwan, says the deal will give Taiwan a chance to show its development experience. “If Taiwan can expand its commercial and industrial experience and share that with neighboring countries, especially Indonesia, it would be an expansion of Taiwan's experience, so overall it will be a win-win deal and a positive development,” he explained.

Indonesian officials want to develop industrial corridors in their country's relatively remote eastern islands. So, two-and-a-half years ago, a senior official from Jakarta approached Taiwan with the plan for Morotai and met with an excited response. The two sides expect to set up a steering committee next month to start talking about details.

Taiwan foreign ministry spokesman Steve Hsia calls the Morotai deal a chance to show its best side to Southeast Asia.

He says other countries were interested but Indonesia particularly wanted to work with Taiwan. He adds that Indonesia may have noticed Taiwan’s specialized technology in fisheries and tourism. Hsia says Taiwan sees a lot of business opportunities in Southeast Asia and hopes its investors can seize more of them, expanding Taiwanese presence in the region. He calls the Morotai model an extremely special case.

Trade between Indonesia and Taiwan totaled $10.8 billion in 2011, behind only China and Japan. Indonesia stands to gain economically from the Morotai deal, just as it has by setting up a special economic zone with Singapore in the 1990s on the island of Batam.

Officials from Taipei say Morotai may become a special economic zone for Taiwan. Taiwan’s representative to Indonesia, Andrew Hsia, says people will move from elsewhere in Indonesia to the island of 50,000 people to work in fisheries, eco-tourism and infrastructure.

China also is seeking to expand in Southeast Asia. Ten years ago, Beijing set up a free trade area with an economic bloc covering 10 Southeast Asian nations.