President Joko “Jokowi” Widodo received Hungarian Prime Minister Viktor Orban as well as dozens of business delegates at a reception party held at the Presidential Palace in Jakarta on Monday, during which Indonesia welcomed an investment plan from a Hungarian company to build a solar power plant in Central Tapanuli, North Sumatra.
The two countries expressed a commitment to boost bilateral cooperation amid Indonesia’s ambitious target of 23 percent of total power provided by renewable sources by 2025. Currently, only 6 percent of the nation’s energy comes from renewable sources.
“I hope this cooperation will become stronger in the future,” Jokowi told a press briefing at the Presidential Palace on Monday. In addition, Jokowi said that Indonesia would also work closely with Hungary in the field of water management as well as IT and the digital economy.
“Among cooperation that has already been established is water management projects in 34 Indonesian cities. Today’s meeting also discussed cooperation in the field of IT systems and agriculture,” the President said.
On Monday, both Jokowi and Orban also witnessed the signing of a cooperation agreement between Indonesia’s Maritime Affairs and Fisheries Ministry and Hungary’s agriculture ministry in the field of fisheries and aquaculture.
The Research and Technology and Higher Education Ministry of and Hungary’s empowerment ministry also signed a higher education exchange program for the 2016 to 2018 period. In response to Jokowi’s praise of Hungary’s investments in Indonesia, Orban said: “It is an honor to be here [today] as your economic partner.”
In his visit to Jakarta, Orban also brought along 50 businesspeople.
Two-way trade rose to US$201.52 million in 2013, an average 4.98 percent increase from 2009. Two-way trade peaked at $438.4 million in 2011, but has decreased since then. The latest investment from Hungary was realized in 2010 in commerce and the hotel industry, totaling $260,000.
Orban said Hungary perceived Indonesia as a major global player given its membership of the G20, adding that the long-term cooperation between the two countries must be based on friendship.
Other than Hungary, Jokowi has sought to forge cooperation in the renewable energy sector with a number of leaders from Nordic countries, for example, Denmark and Finland, which have gained a reputation for using sustainable energy sources such as solar, biomass and wind to meet their energy needs.
During a bilateral meeting between Jokowi and Danish Queen Margrethe II last October, Indonesia and Denmark signed an MoU on renewable energy and energy conservation, amid Danish plans to invest up to Rp 12 billion ($876,000) in a wind-turbine project in East Sumba, East Nusa Tenggara. The pilot project is expected to have a capacity of 800 kilowatts.
Jokowi also recently met with Finland’s President Sauli Vainamo Niinisto where the two countries signed MoU to boost cooperation on sustainable energy, which also covered human-resource training and exchange of technology.
Although Indonesia has an abundance and variety of renewable energy resources, from hydro to geothermal power, a number of issues have hampered development of renewable power plants, including higher building costs than coal-fired power plants.
Amid Indonesia’s need for renewable energy, the Energy and Mineral Resources Ministry has recently also revealed a plan to establish an other entity that would be similar to state-owned electricity firm PT PLN to handle renewable energy. Under the plan, the new entity will act as a middleman in the purchasing of electricity from independent power producers, selling the power to PLN under a price that would not burden the state-owned firm.
The government, however, has recently postponed plans to introduce an energy security fund due to mounting rejection of the plan as it would collect levies from the fossil fuel industry. The reserve fund was first considered following an overhaul of energy subsidies in late 2014. The fund, should it be implemented in the future, would be also used to support the electricity sector, help build strategic petroleum reserves and diversify the nation’s energy resources.