natural gas pipeline
In recent years, Russia has been actively developing its ties with the states of the South East Asian (SEA) region, that remains one of the fastest growing parts of the world. A considerable progress has been achieved in improving ties with Indonesia, a powerful member of the Southeast Asian Nations (ASEAN).

Indonesia - one of the leading countries of Southeast Asia, that has eighth largest economy in the world in terms of GDP, while being in the top five in terms of population. Its success lies in the fact that this island nation is located at the intersection of sea routes connecting the Asia-Pacific region with the Middle East, Europe and Africa. The Indonesian island of Sumatra, along with the Malay Peninsula are forming the famous Straits of Malacca, that allows the impressive trade traffic between such countries as China and Japan to reach Europe. Thus, Indonesia itself is an attractive economic partner and the positions it enjoys in the ASEAN makes it particularly beneficial for those willing to cooperate with this state.

It's imperative to understand that by developing relations with Indonesia, Russia strengthens its position in the whole region that is rich in transport routes and cash flows.

Straits of Malacca map
© Wikipedia
A sure sign of mutual trust enjoyed both by Russia and Indonesia is the rapidly growing arms sales. In 2009, the Russian Federation gave Indonesia a loan of 1 billion dollars for it to be able to purchase Russian military equipment. In 2015, Indonesia has again received a loan from Russia for the same purpose, by this time around it was considerably larger - 3 billion dollars. Now Indonesia is interested in acquiring Russia's most advanced fighter - Su-35, so talks are well under way. There's a possibility that those will be jointly produced in Indonesia.

Moreover, just a few weeks ago came a report that the Indonesian Ministry of Defense is considering the purchase of fifty Russian APCs BTR-80 for its marines. To secure this deal Jakarta is planning to spend up to a 100 million dollars. It is expected that the final decision about the acquisition will be made next spring.

Another important area in which Russia and Indonesia have come to full understanding is the oil industry. Both countries are major oil producers, and their cooperation in this strategically important sector provides the Russian-Indonesian relations with a solid basis.

In January 2016, the two sides officially acknowledged the negotiations about the plans to start joint oil production in Siberia.

Last year at the Russia-ASEAN Business Forum that was held in Sochi, the head of the largest Russian oil producer Rosneft Igor Sechin announced that Indonesia buys petrochemical products made from Russian crude oil through from other states, namely the Republic of Korea and Singapore. This state of affairs not beneficial to either Russia or Indonesia, so he was convinced that it was about the time to establish direct trade relations in this area. Moreover, Sechin noted that oil production levels in Indonesia are crumbling. Some 10 years ago Jakarta produced 71 million tons of crude oil a year, but now it's barely making 38 million tons, and this number keeps dropping. At the same time the country's population is growing rapidly, while industries are increasing the standard of living, hence energy consumption levels are rising. Experts predict that Indonesia will be one of the main importers of hydrocarbons in the Asia-Pacific region.

This position is shared by the Director General at Ministry of Energy and Mineral Resources of Indonesia, Wiratmaja Puja, who has recently announced that Indonesia is planning to import large volumes of oil in the coming years. At the same time, to reduce costs, Indonesia is planning to process the crude oil it's buying itself. To do this, the country needs to build a network of refineries in the near future, and Russia may lend it a helping hand in this area.

It should be noted that investments in refineries is an extremely profitable investment in the Asia-Pacific region, as it's one of the largest consumer of fossil fuels, so Jakarta's own refineries will save its budget from unnecessary expenditures. There's been tough competition between such states as China and Saudi Arabia for the right to assist Indonesia in this area, however Jakarta prefers to work with Russia. According Wiratmaja Puja, one of the reasons for this decision is the top-notch technologies that Russians have in this area. The Tuban refinery is going to be located in the most densely populated area of Indonesia, where the energy consumption levels are the highest.

Yet another sign of the deep trust that Russia and Indonesia share is their transition to the interregional level. For example, Russia's Nizhny Novgorod region has already established trade ties with Indonesian companies, selling agricultural goods, oil, petrochemicals products and so on. In 2016 the bilateral trade levels between Indonesia and the Nizhny Novgorod region exceeded 55 million dollars. In the future, Nizhny Novgorod region, and Indonesia intend to develop cooperation in areas such as engineering, education and tourism. The Indonesian side has also showed its interest in the possible cooperation with the Gorky Automobile Plant. Additionally, according to Indonesia's ambassador to Moscow, Jakarta wants to train its students in Nizhny Novgorod universities.

These facts indicate that Russia and Indonesia are actively developing cooperation in various fields. Apparently, the two countries are on the way to establishing a lasting strategic partnership, through which Russia could strengthen its influence in other ASEAN countries.