After China pact, Taiwan in talks with Indonesia

Published: 12 Oct 2010 02:21:21 PST

TAIPEI, Oct 12 - Officials from Taiwan and Indonesia said on Tuesday they were in talks to develop an outlying Indonesian island, the second dividend for Taiwan after it signed a landmark trade deal with China.

Rival China had once blocked the $416 billion Taiwan economy from expanding overseas by pressuring China's approximately 170 diplomatic allies, including Indonesia, to shun formal contacts with Taipei.

But since signing an economic cooperation accord with Taiwan in June, China has signaled that its new trading partner can pursue informal trade deals with such countries.

A pact opening Indonesia's remote Morotai island to development by Taiwan's government and private industry also positions both to pursue more deals in Indonesia, as Southeast Asia's biggest economy is expected to tap Taiwan again for help.

"Our view toward the development of Taiwan-Indonesian relations, in all fields and at all levels, is optimistic," said Taiwan foreign ministry spokesman James Chang.

Taiwan's sixth biggest trading partner, Singapore, became the first country to risk China's wrath in August with the start of free trade agreement talks.

China's acceptance of those talks raised hopes in Taiwan for more such deals abroad.

Taiwan and Indonesia have held talks twice on a deal to develop Morotai, which has a population of 55,000 people, and the two sides will hold at least once more round, a member of staff at the de facto Indonesian embassy in Taipei said.

Fisheries development tops the agenda, she said.

The deal initiated by Indonesia after the China trade pact was signed should be reached in early 2011, Taiwan media said.

In 2003, former Taiwan president Chen Shui-bian tried to develop tourism infrastructure on the Indonesian island of Bali and explore with Indonesia for oil, said former Chen government official Joseph Wu.

China asked Indonesia at that time to avoid official contact with self-ruled Taiwan, Wu said. Beijing claims Taiwan as its own and says it lacks the sovereignty to sign state-to-state accords.

Taiwan is eyeing new talks with Indonesia on oil and tourism, an official close to the process said. Indonesia sees investment from technologically advanced Taiwan doubling to $2 billion a year from 2011, mainly in textiles, manufacturing and infrastructure.