Oilsands: Indonesia Wants More Trade In Canada, But Not Oil

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OTTAWA - Indonesia is eager to boost trade with Canada, but the South Asian country isn't interested in two of the Harper government's top priorities — pursuing a free trade deal or buying Alberta oilsands crude.

Nonetheless, Indonesian Foreign Minister Marty Natalegawa was unenthusiastic Thursday about boosting trade as he arrived in Ottawa for talks with his counterpart John Baird.

Natalegawa was quick to point out that trade between the two countries soared 60 per cent in the last year, saying there is plenty of room to boost volume and diversify, without a formal trade pact between the two countries.

"But even absent a free trade agreement, the reality is the trade figures and the trade trends (for) our two countries have been very positive over the past year," he told The Canadian Press in an interview.

"So let's focus on what we can do at the moment. That idea of a free trade agreement is something that's still way ahead of us."

Two-way trade between Indonesia and Canada, though climbing fast, is still at a low volume of about $3 billion a year. Natalegawa declined to give a target on boosting that figure.

The Conservative government has been vigorous about pursuing free trade deals with China, India, the European Union and host of smaller countries.

It has also made boosting trade with Asia a major priority, especially after the Obama administration delayed the Keystone XL pipeline project that would have carried oilsands crude to southern U.S. refineries.

Indonesia, the world's fourth largest country with its largest Muslim population, was identified by Canada as a priority country in an internal foreign policy review that Prime Minister Stephen Harper ordered Baird to undertake last year.

Natalegawa said the feeling is mutual about Canada.

But Indonesia is decidedly less enthusiastic about pursuing a play in Canada's oil and gas sector compared with some of its neighbours in the broader Asian neighbourhood.

Natalegawa said his country is more interested in developing new sources of sustainable energy.

"Our focus is on renewable energy. As part of our efforts to mitigate carbon emissions, we are going to more seriously develop our renewable energy capacity whether it be solar, but especially geothermal," he said.

"This is certainly one area that Indonesia is looking to co-operate with Canada in development of clean energy and the entire green economy portfolio."

Unlike its counterparts in China, South Korea, Japan and Thailand, Indonesia's state-owned energy company, Pertamina, has not invested a penny in Canada's energy sector, and there's nothing on the horizon.

"You can never say never. There's always potential for collaboration," said Natalegawa.

He played down any concerned about the high level of carbon emissions created by the extraction of thick oilsands crude.

"That's not an issue we have really been zeroing in on because we've been focused on our own responsibilities in trying to cut our own contribution to the emissions," he said.

After their meeting, Natalegawa and Baird held a working lunch and signed a joint declaration to "enhance bilateral consultations," Baird's office said.

Indonesia is hopeful that Harper will visit their country, perhaps in November, said Natalegawa. The two countries are celebrating 60 years of diplomatic relations this year.

Indonesia is the leading player in Southeast Asia. It has weathered the recession well with 6.5 per cent growth in recent years, and is on track for more of the same. It is the region's only G20 member.

Some analysts have speculated that with its continued growth Indonesia might be poised bump India, sluggish of late, out of the so-called BRIC club of countries that also includes Brazil, Russia and China.

One senior Foreign Affairs official was enthusiastic about future relations as he welcomed Natalegawa to an invitation-only speech Thursday.

"Indonesia of today is a dynamic economic and political powerhouse in the Southeast Asia region," said Peter McGovern, assistant deputy minister for business development in Asia.

"Some, myself included, tout Indonesia as the next member of the BRICs."

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