King of Saudi Arabia Salman bin Abdul Aziz al-Saud
By: Sandy Arifin)*
The visit of King of Saudi Arabia Salman bin Abdul Aziz al-Saud to Indonesia welcomed the bells-and whistles. The king mentioned would invest US $ 25 billion, or around Rp 334 trillion. Funds will be disbursed to various fields, including oil and gas sector.
Overwhelming response was reasonable. After 47 years, only this time the King of Saudi Arabia to visit our country. This trip could open a new chapter of cooperation between the two countries and strengthen diplomatic relations. But too optimistic disbursement of investment affairs of Saudi Arabia is not a wise attitude.
Experience shows investment realization Saudi Arabia does not always go smoothly. A number of the memorandum of understanding of investment projects, such as construction of the Balongan refinery in Indramayu, West Java; and Dumai refinery in Riau, in limbo. Saudi Arabian oil company, Aramco, never disbursed. The project finally managed entirely by Pertamina without foreign investors.
The investment figure for Saudi Arabia is also small. During 2011-2016, Saudi Arabia investment of only US $ 34.3 million or 0.02 percent of total foreign investment in Indonesia. The investment value in Indonesia the country ranks only 57th. Throughout 2016 Saudi Arabia realized investment was only US $ 900 thousand for 44 projects. The figure is far below the investment realization of other Middle Eastern countries, such as Kuwait, which reached US $ 3.6 million.
The five largest investors are Singapore (US $ 2.9 billion), Japan (US $ 1.6 billion), Hong Kong (US $ 500 million), China (US $ 500 million) and the Netherlands (US $ 300 million).
Humanitarian aid for the Saudi Arabian government also did not go smoothly. Crane unfortunate victims in the Haram in 2015 until now have not received compensation. In that incident, 12 members of the Indonesian pilgrims died and 42 were injured. The Saudi government had promised compensation of 1 million riyals, or USD 3.8 billion for all the families of the victims died and 500 thousand riyals, or USD 1.9 billion for the wounded.
That is why, plans massive investment Saudi Arabia should be addressed critically. Moreover, the country is experiencing economic difficulties. The drop in world oil prices since 2014 hit the economy of Saudi Arabia. The oil country had a deficit of US $ 89 billion last year. Whereas 80 percent of their income comes from oil exports. Saudi Arabia’s investment plans to a number of Asian countries, including Indonesia, should be seen as the country’s efforts to get new revenue sources beyond oil.
The Indonesian government must still take advantage of the opportunity. If Saudi Arabia cooperates serious economic and disburse funds, the government needs to be prepared. But people need to realize also that the investment plan mentioned in official visit will not all be realized.