After 17 years, Indonesia wants a piece of the China trade

Indonesia is moving to open direct trade ties with China, but Jakarta made it clear the time is not yet ripe for formal relations. Foreign Minister Mochtar Kusumaatmadja said last month that the Indonesian government had decided to start direct trade. Trade was frozen 17 years ago after an abortive communist coup. But he added that it would be a gradual process with the government probably approving deals initially on a case-by-case basis.

The Jakarta leadership, particularly the military, is not yet ready to forgive and forget that China meddled in Indonesia's internal affairs by supporting the communist coup attempt in September 1965 that led to bloody suppression of Chinese interests in the country.

In a 1983 speech to the National Congress, President Suharto repeated that the time was not yet ripe for normalization because China ``has not yet convinced us that it will not assist remnants of the Communist Party.''

The key impetus to warming trade relations is Indonesia's need to step up its foreign trade. In particular, it wants to diversify away from the volatile commodities of oil and gas, which now provide 70 percent of the country's foreign-exchange earnings but have been shrinking.

``We have to open up,'' said Dr. Mochtar. ``We have to enter the market there. . . . We cannot leave [it] to other countries even if they are neighbors and friendly countries.''

Trade between Indonesia and China in recent years has been conducted through third countries, particularly Hong Kong and Singapore. But Indonesian entrepreneurs have become increasingly vocal in their efforts to be allowed direct access, prompting Dr. Mochtar in early November to ask the Foreign, Trade, and Defense ministries to jointly examine the problem.

A significant breakthrough occurred when the military, long adamant about the security risks and general undesirability of normalizing relations with Peking, indicated a positive attitude toward the trade idea. The military recently announced it was ready to provide security for any direct trade links with China.

A Chinese Foreign Ministry spokesman in Peking said in November that China had always been positive about developing friendly ties with Indonesia. He said China had made several overtures in the past four years.

But there is no indication Jakarta is eager to go very far along that particular road at this time. Indonesian sources here say there are a number of internal factors that made it difficult to normalize relations.

First, there is still a fairly open fear that normalization would encourage the small alien Chinese minority in Indonesia to reorient its thinking toward the mainland once again, they say. They also point to opposition groups, particularly radical Muslims or right-wing nationalists, who say that China is a far greater long-term threat than are Vietnam and the Soviet Union.

There is also a fairly strong pro-Taiwan lobby which points out that the trade with Taiwan far exceeds the limited indirect dealings with the mainland. There are no accurate figures of the indirect trade, but it is reckoned to run into not more than a few million dollars.

Indonesia has been showing a more relaxed attitude by removing trade restrictions with the Soviet bloc. In October a high-powered government-business mission visited Eastern Europe. Jakarta also has cleared the way for private traders in Indonesia to deal directly with Eastern buyers.

But as far as China is concerned, the development of substantial contacts at any level is regarded as carrying with it more risks than advantages at the present time.