fixed eurogov final paper

7/31/2019 Fixed Eurogov Final Paper

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TABLE OF CONTENT

TABLE OF CONTENT.......1

JOURNAL ANALYSIS 2

1. Indonesia and the European Union: Building on common grou . 22. European Union Visibility in Indonesia 33. European Presence in Indonesia 44. The Normative Ethics of the European Union . 55. Europe and Asia at the Turn of the Century 6MIDTERM PAPER PROGRESS REPORT 8

Abstract. 9

Introduction

I. Research Background. 10II.

Research Question..11

III. Conseptual Framework .............. 11IV. Hypothesis..12FINAL PAPER: EUROCHAM : Mutualism or Commensalism?..........13

CHAPTER I INTRODUCTION

I.1 Research Background...14

I.2 Research Question 15

I.3 Conceptual Framework. 15

I.4 Hypothesis 16

CHAPTER II SUBSTANCE

II.1 Eurocham in terms of Economic Partnership. 17II.2 European Perspective towards EuroCham as an Economic Relation

with Indonesia............. 19

II.3 Indonesian Perspective towards EuroCham as an Economic Relation

with European Union.. 21

II.4 Roles of the Normative Power of European Union Related to the

Inhibiting Obstacles towards the Practice of EuroCham in Indonesia... 24

CHAPTER III CONCLUSION. 27

BIBLIOGRAFI. 28


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JOURNAL ANALYSIS

1. Indonesia and the European Union: Building on common ground1The challenges of the new era of globalization, demographic, and economic changes,

as we have to reconcile the old and the new values, here in this article from Asia European

Union Journal, Benita Ferrero-Waldner, as the commissioner for External Relations and

European Union Neighborhood Policy of European Union Commission claimed that

Indonesia and the European Union have a great deal in common, both, in the challenges we

face and in the way we are dealing with them. As in getting into the form of democracy, the

biggest challenges for Indonesia and European Union are coming from economic and social

stagnation or fragile institution. She believe that by understanding each other better, Indonesia

and the European Union will work together more closely and find more successful answers to

the issues we have to address.

It is clear that the author is delivering her state of mind that Indonesia and European

Union have to work together in order to solve the root problems that prevents both countries

from the goals. And European Union sees Indonesia as a potential country to promote the

virtues of pluralism and democracy to the international community.

From this article, we can see that the core problem which has been troubling Indonesia

and European Union to reach their goals generally is the difficulties of finding ways to

accommodate differences in the high level of pluralities that may cause disputes, without

disrespecting the fundamental values. I think this is the reason that makes tolerance and

respect to be the important factors here. And I personally agree of the statement that claimed

Indonesia as the potential country to promote the virtue of pluralism and democracy to

international community, because Indonesia is indeed a big democratic country with so many

ethnics and religion within the society, but despite all that, Indonesia is having a more likely

secular government that emphasizing in a comprehensive welfare, without placing one ethnic

or religion in the more important position then others and also committed to reform.

And if I may conclude, through this article, in order to reach their goals, Indonesia and

European Union is recommended to work together to face and handle the common challenges,

which refers to economic and social stagnation or fragile institution, by accommodating

potential disputes without disrespecting the fundamental values. Regarding this statement, Im

totally agreed that a dispute mechanism which respects the fundamental values is logically

effecting the economic and social development. But, a fragile constitution is supposed to be

1Benita Ferrero-Waldner, Indonesia and the European Union: Building on common ground, Asia

Europe Journal, vol.5, no.2, June 2007


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the tools to accommodate differences or potential disputes which I found it work the other

way around, where the strength or fragility of the institution is the one that might affect the

enforcement of accommodating the potential disputes.

Through this article as a whole, actually the main idea that the author would like to

deliver to the reader is how important it is to build an understanding framework betweenIndonesia and the European Union, so both parties could be able to work together, considering

the common challenges they are facing in this global era.

2. European Union Visibility in Indonesia2In this interdependent world, the European Unions relations with Indonesia have

already been within the framework of its structure, where the relations have been mainly

confined to development and trade cooperation. In this journal original paper written by

Gunaryadi, a scholar of historical and literary studies, faculty of humanities and socialsciences at the university of Portsmouth, and the institute of higher European Union studies at

the hague university of professional education, tells us about the necessity to initiate quality

centres of excellence that concentrate on European Union as an instrument to increase the

European Unions visibility in Indonesia by influencing the perceptions of Indonesians people

and bring consciousness of Indonesians, which expected to lead to a proper appreciation of its

integration process and to a better mutual understanding.

For instance, European Union Community delegation in Indonesia might be the best

way to represent the European Union visibility as a supranational entity. Indonesia currently

perceives European Union merely as a trading community and paid less attention to the

European Unions supranational character. The activities carried out either by individual or

EC delegation in Jakarta is a good example of the means to improve European Unions

visibility in Indonesia. But necessity to establish quality centres of excellence is still the most

important approaches.

Considering that in order to improve the visibility is requiring contributions from both

sides, it become an important thing to know more about how reciprocal the interdependence

between Indonesia and European Union are. As we know, European Union has been the

largest foreign direct investment in Indonesia, according to that, Indonesia needs European

Union as a partner in counter balancing the growth of unilateralism, while European Union

itself needs Indonesia as a market of its commodities.In short, despite the reciprocal interdependence relation that have already established

between European Union and Indonesia, European Unions visibility in Indonesia is still less

2Gunaryadi,European Union Visibility in Indonesia, Asia Europe Journal, vol.3, no.1, April 2005


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visible, where Indonesians are not really aware about European Unions framework in the

context of supranational scale. So Indonesians considered European Union more likely as

fragmented states instead of a single entity

Actually, from this journal original paper, I still couldnt get how the visibilities could

affect mutual understanding on a relation between two different countries, while for a

decreasing amount of appreciation, the matter of visibilities is still make sense. According to

my opinion, through this paper, the author is failed to deliver the urgencies of the issue that he

focused on, there are no explanation of the real effect that significantly disadvantaged the

European Union. Despite all that, I believe that in order to improve Indonesians awareness of

the structural matters of European Union, European Union can take advantage from the

scholarship or exchanges program that is well-known in Indonesia to include a brief or maybe

even deep studies and explanation about European Union as a supranational entity in the

scholarship program, or else European Union can put the knowledge of the structural and

functional forms of European Union as a requirements of the scholarship program.

3. European Presence in Indonesia3For some reason, Tri widodo, a graduated scholar from Gadjah Mada University and

Hiroshima University of Economics, decide to focus his paper to the discussion about the

presence of European Union in Indonesia, those reasons are the historical perspective which

refers specifically to Holland who used to rule Indonesia in the colonial era, international

trade, and the north-south relations that might formed from the economic relations between

these two parties.

The reorientation of relationship that established between European Union and

Indonesia has been supported dominantly by economic and political motive. European Unionis one of most dominant market for Indonesia, while at the same time, this paper tell us that

Indonesia is a tiny market for European Union. Both Indonesia and European Union itself play

an important role for each others economic growth, through trades, export and import

activities, investments, exchanges of currency, debt and development assistance, and other

businesses activities.

Since Indonesia is having several issues regarding the foreign direct investments (FDI)

according to at least 2 reasons, firstmost countries try to avoid unwarranted dependence on

one country for foreign investment due to the fear of foreign manipulation, political

sensitivities, and nationalist sentiment. Second, there is increased interest in alleged

differences in the behavior of foreign investors from different countries. The presence of

European Union is actually giving several advantage to Indonesia in certain aspects, although

3Tri Widodo,European Presence in Indonesia, Asia Europe Journal, vol.5, no.3, September 2007


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Indonesia is not the largest absorber of the European Unions FDI, the European Union has

been the largest investor in Indonesia since the recording of the FDI data started in 1967.

Considering Indonesia as the worlds fourth most populous country and who plays an

important role in the region, Europes economic ties with Indonesia are actually already

considerable in terms of trade, investment, and business aspects. This paper explicitly exhibits

the economic relationship between Indonesia and European Union in many different ways. It

actually the aim of this paper, is to show the readers that the established relation especially in

terms of economy between Indonesia and European Union leads to an increasing

developmental growth to both sides.

The statement that claim Indonesia as is a tiny market for European Union is slightly

contradictive with my previous assumption, but not anymore after I read further and found out

that the provided data was from the range of period 1993-2004 which is including the period

of monetary crisis in 1997s that decrease the buying capability of Indonesian market at that

period.

In my point of view, this paper is a little bit hard to understand, because it dominatesby the presentation of the charts and graphics of the statistic data related to the trade flows,

rate of the export and import, investment accumulation, debt growth rate, and other similar

economic relations, without any conceptual framework explanation that may clarify readers

comprehension. Other than that, Im having the same thought about the utilization of the

regional framework of Asia-Europe Meeting (ASEM) that not being optimally utilized to

improve the relationship ties between Europe and Asia in general, and also Europe and

Indonesia in specific terms. This regional partnership framework is not quite different to the

APEC (Asia-Pacific Economic Cooperation) which also have not utilized optimally by the

member states. ASEM really have to improve the management within the organization and

start to formulate and implement the work plan for the sake of the better development andrelation within the member countries.

4. The Normative Ethics of the European Union4Sees European integration processes as a creative efforts by simply existing differently

in the world of states and the relation between them. Ian Maners, the author of this paper,

perceived European Union as the pioneer of the changes in the international relations

normality. His focus of analysis is a holistic approach to the European Union in world politics,

including the international dimensions of internal policies, enlargement, and the external

actions.

In order to analyze European Unions policy and influence in the world politics

empirically, the term normative Power is considered important, especially to describe

European Unions principles, actions, and impact in world politics. This normative power of

4Ian Maners, The Normative Ethics of the European Union, International Affairs, vol.84, no. 1, January 2008


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the European Union is divided into two different categories, which are the substantive

normative principles and the procedural normative ethics.

There are several substantive normative principles that promoted by the European

Union, namely, the Unions Objective, general provisions on the Unions external actions,

sustainable peace, social freedom, consensual democracy, associative human rights,

supranational rule of law, inclusive equality, social solidarity, sustainable development, and

good governance. While the procedural normative ethics are consist of three major approaches

in normative ethics, firstis the virtue ethics, that approaches European Unions principle by

emphasizing on virtues or moral character of social groups which encourage a focus on the

interpretation of virtues such as benevolence, generosity, and justice. Second is the

deontological ethics which move the focus beyond the character of social groups toward an

understanding of group actions and inactions, in additions it emphasizes rights, duties, or rules

in order to approach European Unions actions. And third, the consequentialist ethics which

used to approach European Unions impacts, it theorize the normative power by involving the

analysis of impacts, outcomes, and also implications of European Unions actions.In the end of the explanation, it known that Ian Maners main point in his paper is to

deliver to the readers that European Union is indeed has been and always will be a normative

power in world politics, it might be caused by the ability of the European Union as a

supranational entity, to establish normative principles and apply them to different realities,

which is considered to be the central to the normative ethics analysis results that European

union should live by example to ensure both the coherence in normative terms and the

consistence of its policies. Be reasonable to ensure that European Union reasons and

rationalizes its external actions through processes of engagement and dialogue. And the last

analysis result is European Union should do least harm to ensure that European Union thinks

reflexively about the impact of its policies on partner countries and region.Regarding the main point that proposed by the author, I strongly agree that Europe is

the pioneer of the different form of international relationship in the wide world, and it also

plays a very important role which is refers to the contribution of its mindset that leads to a

brand new way to engage in the international world stage. But there is one thing that I have

been waiting to be explained here in this paper, the barriers that European Union has to deal

with in the journey towards the integration process, which is not mentioned until the end of

the paper content.

5. Europe and Asia at the Turn of the Century5In economic terms, the European Union has successfully prepared for monetary union

and at the same time it is confident of its role in a free-trade system. Politically the end of cold

war allowed European Union to launch the process of enlargement that emerged from the

Luxembourg European council. The final result will be a larger and more self-confident union

5Romano Prodi,Europe as I See it, Polity Press, United Kingdom, 2000, p. 87-92


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that able to project its influence well beyond its continental borders. As the European Unions

share of the world economy grows and the political problems caused by the continents

division begin to fade, Europe will be able to devote its attention to wider issues.

Since the establishment of the European community, progress in this directionsthree

fundamental features. First, putting centuries-long political conflict in the past. Second, the

establishment of a large single market. Third, provide a common framework for the national

political system and force to become modern industrial democracieshas influenced

international relations beyond the communitys borders, through the participation of its

member states in the global institutional network by setting a powerful example.

European integration, Asian expansion, and the dense network of relations between

open economies have created a genuinely global market, in which Europe and Asia are no

longer isolated partners but part of a wider system. The particular nature of these economic

processes, which are driven more by direct investments from foreign sources then by

traditional trading relations, has increased each countrys interest in the economies of the

others. Europe has realized that it can no longer afford to ignore the important part of theworld that includes great nations such as Asia, and will soon be the largest economic region in

the world.

But in order to be a player on the Asian stage, Europe has to deal with the major

obstacles to progress in Asia which is more political in nature. In this region, relations

between neighboring countries are often very tense, and concerns over security are such that

the possibility of a disastrous military conflict cannot be ruled out, where the solutions to

these security problem can only be found in its political natures.

From this chapter as a whole, actually the main idea that Romano Prodithe former

president of the European Commission period 1999-2004 and also the author of this book

entitled Europe as I See it want to deliver to the readers, is that the future indeed promisesa greater diplomatic role for Europe in Asia. This role, not only depends on closer economic

ties, but also on the experience acquired by Europe in building institution to pursue what it

takes to deal with the major obstacles which has already mentioned before.

Regarding the tense relation between neighboring countries in Asia, that European

Union have to face in order to gain the desired position and relation in the Asian stage, I think,

I consider it as the other way around. Instead of obstacle, I found that this political nature of

the Asian countries could turn to be the best way for Europe to engage with the Asian

countries. What Im trying to say is, that the tenses between Asian countries which is likely

often to happen, is making its path for Europe to enter the region as the third party that may be

able to play a helpful role and also at the same time, Europe can learn much more about the

cultural nature of Asian people as well, along with its involvement in the conflict resolution.


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MIDTERM PAPER

PROGRESS REPORT


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Abstract

In this global era, most nation engage in the international economic activities by

making a partnership. European Business Chamber of Commerce (EUROCHAM) is one of

the example of the newly establish partnership between European Union countries and

Indonesia. EUROCHAM is a non-profit organization that was formed by the initiative of

European businessmen in Indonesia to bridges business relationship of Indonesia and Europe.

Besides, there is another purpose of this organization which is to make progress toward a

better trade relation between Indonesia and the European Union countries, with a focus on a

freer trade with transparent rules.

EUROCHAM as a contemporary issue that happening between European Union andIndonesia, which have a quite large distinction, is a very interesting issue for me.

Considering that this organization is an initiative of the European businessmen who formed it

with the purpose to represent the interests of European business in Indonesia, I personally

curious if EUROCHAM existence will be mutually beneficial to both parties cooperate, or

whether it will only be advantageous for the European Union alone? This is the question that

will be the focus of my paper entitled EUROCHAM : Mutualism or Commensalism

In this paper, I will start the problem solving by comparing the economic development

between the two parties, associated with the presence of the EUROCHAM itself. With the

literature study methods, that used to help the explanation. May this paper be useful for the

readers and brings a better future for Indonesia.

Keywords : eurocham, economy partnership, business chamber, European Union, Indonesia


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INTRODUCTION

I. Research Background

These days, a partnership between 2 different countries or more is a common

things. Since a partnership could increases bargaining position of a nation, that is

how all nation in the world engage with the worldwide competition in this global

era.

European Business Chamber of Commerce (EUROCHAM) is a non-profit

organization that was formed by the initiative of

European businessmen in Indonesia. This organization is fully supported by the

European Union Delegation in Indonesia, European chambers of commerce,

and other associations. Chamber of Commerce was inaugurated on May 11th

2004 and started operating since September 20046.

This organization is one of many example of a partnership that I have mention

earlier. EUROCHAM was built to bridges business relationship of Indonesia and

Europe. This effort is primarily done through the Sectoral Working

Groups, which represent the interests of European businesses in 14 different

sectors of industry7. It is known that the purpose of International Trade working

groups in this organization is to make progress toward a better trade relation

between Indonesia and the European Union, with a focus on a freer trade with

transparent rules8.

As a very different country compared to one another, Indonesia and EU

countries have a large economic development distinction. Base on that perception,

this newly established partnership brings a concern about the capability of

Indonesian human resources to deal with this emerging new foreign economy

6EUROCHAM . main page (online), http://www.eurocham.or.id/index.php?option=content&id=76&lang=id

accessed 29/10/11 10:207

Putera Sampoerna Foundation.BERBAGI PENGALAMAN MEMAKSIMALKAN CSR DI EUROCHAM 2011

(ONLINE),

http://www.sampoernafoundation.org/index.php?option=com_content&view=article&id=576&Itemid=6&lang=i

n accessed 29/10/11 09:298

Pdf EUROCHAM .Perdagangan Internasional (online),

http://pp.eurocham.or.id/pdf%20bahasa/Bab%2013%20-%20Perdagangan%20Internasional.pdfaccessed

29/10/11 10:11
http://www.eurocham.or.id/index.php?option=content&id=76&lang=idhttp://www.sampoernafoundation.org/index.php?option=com_content&view=article&id=576&Itemid=6&lang=inhttp://www.sampoernafoundation.org/index.php?option=com_content&view=article&id=576&Itemid=6&lang=inhttp://pp.eurocham.or.id/pdf%20bahasa/Bab%2013%20-%20Perdagangan%20Internasional.pdfhttp://pp.eurocham.or.id/pdf%20bahasa/Bab%2013%20-%20Perdagangan%20Internasional.pdfhttp://www.sampoernafoundation.org/index.php?option=com_content&view=article&id=576&Itemid=6&lang=inhttp://www.sampoernafoundation.org/index.php?option=com_content&view=article&id=576&Itemid=6&lang=inhttp://www.eurocham.or.id/index.php?option=content&id=76&lang=id


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power. Does this affect the Indonesian domestic economy development to rise

along with this partnership or the other way around?

II. Research QuestionQuestion analyzed in this paper is :

1. Is EUROCHAM mutually beneficial to both parties cooperating or is it onlyadvantageous to one side?

III. Conceptual FrameworkSeveral conceptual frameworks that can be use as a references in this research

paper are :

1. Value-based foreign policy identity for the EU. That had been identified by theformer Head of the Delegation of the European Commission to the UN, John

Richardson (2001-2005). Richardson identified 6 values, but in this paper, the

values which involved essentially in the European foreign policies, will be

emphasized only on the Social and Economic Solidarity/community value

which underlines the need for strengthened partnership between rich countries

and poor countries to achieve the development objectives of the Millennium

Declaration9.

2. The concept of economic partnership effects which divided into 2 categories.The first one is static effect, and the second one is dynamic effect. Static effects

included trade creation and trade diversion, while the dynamic effects included

economic of large scale, increases competition, and attract flows of

investment10

.

9Second Pan-European Conference Standing Group on EU Politics Bologna, 24-26 June 2004 . The European

Union and the United Nations (online), http://www.jhubc.it/ecpr-bologna/docs/293.pdfaccessed 31/10/11 18:0010Personal note from earlier class in the 2nd semester, Area Study subject.
http://www.jhubc.it/ecpr-bologna/docs/293.pdfhttp://www.jhubc.it/ecpr-bologna/docs/293.pdf


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IV. Hypothesis

The hypothesis I propose here, is the existence of EUROCHAM indeed attracted

many foreign investors to invest in Indonesia, but in the other side, the emerging

foreign investment products with the high average prices and also higher efficiency

level, is inversely proportional compare to Indonesians own domestic economic

development. So this imbalance between the economic capacity of Indonesia and

foreign investment products prices and efficiency are going to make the existence

of EUROCHAM is only one side beneficial, which is clearly refers to European

Union Countries.


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FINAL PAPER

EUROCHAM : Mutualism

or Commensalism?


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CHAPTER I

INTRODUCTION

I.1 Research Background

These days, a partnership between 2 different countries or more is a common

things. Since a partnership could increases bargaining position of a nation, that is

how all nation in the world engage with the worldwide competition in this global

era.

European Business Chamber of Commerce (EUROCHAM) is a non-profit

organization that was formed by the initiative of

European businessmen in Indonesia. This organization is fully supported by the

European Union Delegation in Indonesia, European chambers of commerce,

and other associations. Chamber of Commerce was inaugurated on May 11th

2004 and started operating since September 200411

.

This organization is one of many example of a partnership that I have mention

earlier. EUROCHAM was built to bridges business relationship of Indonesia and

Europe. This effort is primarily done through the Sectoral Working

Groups, which represent the interests of European businesses in 14 different

sectors of industry12

. It is known that the purpose of International Trade working

groups in this organization is to make progress toward a better trade relation

between Indonesia and the European Union, with a focus on a freer trade with

transparent rules13

.

As a very different country compared to one another, Indonesia and EU

countries have a large economic development distinction. Base on that perception,

11EUROCHAM . main page (online), http://www.eurocham.or.id/index.php?option=content&id=76&lang=id

accessed October 29th

2011 10:2012

Putera Sampoerna Foundation.BERBAGI PENGALAMAN MEMAKSIMALKAN CSR DI EUROCHAM 2011

(online),

http://www.sampoernafoundation.org/index.php?option=com_content&view=article&id=576&Itemid=6&lang=i

n accessed October 29th

2011 09:2913

Pdf EUROCHAM .Perdagangan Internasional (online),

http://pp.eurocham.or.id/pdf%20bahasa/Bab%2013%20-%20Perdagangan%20Internasional.pdfaccessed

October 29th

2011 10:11
http://www.eurocham.or.id/index.php?option=content&id=76&lang=idhttp://www.sampoernafoundation.org/index.php?option=com_content&view=article&id=576&Itemid=6&lang=inhttp://www.sampoernafoundation.org/index.php?option=com_content&view=article&id=576&Itemid=6&lang=inhttp://pp.eurocham.or.id/pdf%20bahasa/Bab%2013%20-%20Perdagangan%20Internasional.pdfhttp://pp.eurocham.or.id/pdf%20bahasa/Bab%2013%20-%20Perdagangan%20Internasional.pdfhttp://www.sampoernafoundation.org/index.php?option=com_content&view=article&id=576&Itemid=6&lang=inhttp://www.sampoernafoundation.org/index.php?option=com_content&view=article&id=576&Itemid=6&lang=inhttp://www.eurocham.or.id/index.php?option=content&id=76&lang=id


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this newly established partnership brings a concern about the capability of

Indonesian human resources to deal with this emerging new foreign economy

power. Does this affect the Indonesian domestic economy development to rise

along with this partnership or the other way around?

I.2 Research Question

Question analyzed in this paper is :

2. Is EUROCHAM mutually beneficial to both parties cooperating, or is it onlyadvantageous to one side?

3. What is the normative power of EU that directly driven this cooperationrelationship?

I.3 Conceptual Framework

Several conceptual frameworks that can be use as a references in this research

paper are :

3. Normative power of European Union, that classified into 3 different norms.First, the core norms that consist of peace, liberty, democracy, rule of law, and

respect of human rights. Second, the minor norms that includes social

solidarity, anti-discrimination, sustainable development, and good governance.

Thirdtechnical norms that consist of risk averse power, Europe as a structuring

power (collective hegemon), European generosity, and the market power of

Europe14

.

14Ian Manners, Normative Power Europe: A Contradiction in Terms?Journal of Common Market Studies

Vol.40, No. 2, 2002


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4. Quality centres of excellence as the approaches in promoting European Unionvisibility in Indonesia, which proposed in original paper of Asia Europe

Journal written by Gunaryadi. This approaches are classified into three types:

(1) academic; (2) non-academic; (3) a combination of the two15

.

I.4 Hypothesis

The hypothesis I propose here, is the existence of EuroCham in Indonesia,

allowed both parties to play an important role for each others economic growth,

through trades, export and import activities, investments, exchanges of currency,

debt assistance and development assistance, and other businesses activities, which

create a reciprocal pattern. Therefore, the EuroCham as a cooperation frame

considered mutually beneficial, which mainly driven by the market power of

Europe16

.

15Gunaryadi,European Union Visibility in Indonesia, Asia Europe Journal, vol.3, no.1, April 2005

16Chad Damro,Market Power Europe, March 2011, pdf.document


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CHAPTER II

SUBSTANCE

II.1 Eurocham in terms of Economic Partnership

The European Business Chamber of Commerce in Indonesia (EuroCham) promotes

and supports European business interests across the archipelago by seeking better market

access and an improved business environment in Indonesia for European companies. It

directly represents more than 120 European companies and organizations in Indonesia, many

of them being the major investors in their sector. EuroCham aims to have the broadest

possible representation of European business in Indonesia within its membership, which

consists of mainly large, but also medium and small enterprises from a wide variety of

industry sectors.

EuroCham maintains close working relationships with the European Commission in

Brussels, the European Union Delegation in Indonesia, European Embassies and Bilateral

Chambers of Commerce in Indonesia and European Chambers of Commerce globally through

the European Business Organisations (EBO) Worldwide Network. Contribute to an ongoing

dialogue with the Government of Indonesia, which aims to improve the investment climate

and business environment in the country. EuroChams role in this dialogue is to represent the

views of European business from a wide range of sectors.

The EU Delegation in Jakarta and EuroCham enjoy a close working relationship. The

EU Delegation represents EU member states in improving market access for EU companies,

from the governmental side, while EuroCham is the main advocacy organisation representing

EU-wide business interests in Indonesia in the dialogue with the Government17.

The description of EuroChams activities, are divided into 3 main categories, the first

one is advocacy, which include the sectoral working groups, information sharing, position

papers, and also private public policy dialogue. The second one is networking, that include a

gathering event such as gala dinner, tournament, and luncheons or dinners. And the third one

17Erocham,Annual Position Paper, 2011, pdf, document


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is Publication, that conducted through Annual Position Papers, EU Financed Studies,

Eurobusiness Directory, Country Report , and Regulatory Update18

.

Through EuroCham, European business is provided with an effective communication

and advocacy channel to the Indonesian Government. Recommendations and advocacy

activities are shaped through the Sectoral Working Groups where EuroCham also supports

member companies by providing a forum for the exchange of information on business,

regulatory and market conditions in Indonesia.

EuroCham produces position papers that address issues identified by the member

companies as obstacles to operations and expansion within their respective industries, as well

as market entry and market access for companies not yet active in the Indonesian market. The

papers provide recommendations to the Government of Indonesia for improvement of the

business environment both on general issues, as well as industry specific problems. They also

serve to keep the European Commission, as well as the governments of individual European

Union member states, informed about Indonesias business environment.

The purpose of the Position Papers provided by the sectoral working groups is to

present accurate sectoral assessments that can be used to improve the business and investment

climate in the country towards facilitating the growth and development of the Indonesian

economy. EuroChams Annual Position Papers aim to engage the European companies and

the Indonesian authorities in a positive results-orientated dialogue19

.

The sectoral working groups are the backbone and the main communication tool of the

chamber. By writing the Annual Position Paper, which is presented to the Indonesian

Government, the working groups are obliged find out and conclude the core business

problems, and make recommendations on how the Indonesian Government can improve the

country's business environment. The documents also used as working tools for European

Commission officials.

Technically, this sectoral working groups are working as a team, led by a chairperson,

and the members are vary according to what sector. Some are consist of European companies,

and some others are consist of organizations, embassies, and also companies, which have an

18Eurochams presentation, Seminar on Trade and Investment Opportunities Between Poland and Indonesia,

November 25th

2010, ppt. document

19Erocham,Annual Position Paper, 2011, pdf, document


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obligation to do an observation reviews, analyse about the current situation of the specific

sector they focused on, and held a discussion forum to share the result as an information, such

as seminars. In short, this sectoral working groups are the main tools of EuroCham to reach its

aim to be the focal point for providing information and guidance to EU companies interested

to enter the Indonesian market20

. The working groups are specified into 14 sectors of industry,

namely :

1. International Trade Working Group2. Infrastructure Working Group3. National Single Window Working Group4. Transport & Logistics Working Group5. FMCG (Fast Moving Consumer Goods) Working Group6. Chemicals & Pharmaceuticals Working Group7. Automotive & Tires Working Group8. Tobacco Working Group9. Property Working Group10.IPR (Intellectual Property Rights) Working Group11.Security Working Group12.Finance Working Group13.Sustainable Development Working Group14.Legal-Tax-Investment Working Group

II.2 European Perspective towards EuroCham as an Economic Relation with Indonesia

The interests of different foreign countries often differ widely, while those

representing local business may also present a different views to that of foreign business. It is

thus becoming a special strength that European business has its own organisation, which

provides unified representation of shared European views in the dialogue with the

Government. Besides, in most cases these views are aligned with the advocacy coming out of

the European Union in Brussels and the EU Delegation in Jakarta.

20Eurocham, Working Groups,

, accessed December 29th

2011 20:32
http://www.eurocham.or.id/index.php?option=com_content&view=category&layout=blog&id=55&Itemid=117http://www.eurocham.or.id/index.php?option=com_content&view=category&layout=blog&id=55&Itemid=117


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The European Commission has formulated its blueprint for an EU trade policy to help

revitalize Europes economy. In its paper Trade, Growth and World Affairs, the

Commission analyses how trade is an engine for economic growth and job creation. It

proposes a strategy to reduce trade barriers, open global markets and obtain a fair deal for

European businesses. The paper sets out the triple benefit of trade for Europe: stronger

economic growth, more jobs and increased consumer choice at lower prices. The Commission

plans to use its trade policy to help exit the current crisis and create the right environment for

a strong EU economy21.

Since 2000 the EU has shown a desire to improve bilateral relations with Indonesia,

considering that this bilateral cooperation with EU countries in the region is still based on the

framework agreement of cooperation in ASEAN. It was stated in the 2000 EU

Communication entitled "Developing Closer Relations Between Indonesia and the European

Union" which is a further elaboration of its strategy in Asia, as outlined in the EC

Communication entitled "Europe and Asia: A Strategic Framework for Enhanced

Partnership"22

.

Moreover, there is some kind of obstacle to build a better mutual understanding in

terms of bilateral relation with Indonesia that European have in mind, which is related to its

visibility in Indonesians point of view. European sees that instead of considering European

union as a supernational or single entity, Indonesian tend to perceived European Union as a

fragmented states, that a proper appreciation of its integration process is somehow considered

as a potential influence to a better mutual understanding23.

Based on those assumption, European Union really sure that a further bilateral

relationship with Indonesia, is the best alternative solution towards this situation. Therefore,

EuroCham is a right tool for it, regarding that the reorientation of relationship that established

between European Union and Indonesia has been supported dominantly by economic and

political motive24

. Through EuroCham, the bilateral cooperation between Indonesia and

European Union are no longer established in the regional framework, EuroCham allowed

21Ian Bache, Stephen George, & Simon Bulmer, Politics in the European Union 3rd

edn, Oxford University Press,

United Kingdom, 2011, p.500-50322

Ministry of Foreign Affairs,European Union,

,

accessed December 29th

2011 20:4623

Gunaryadi,European Union Visibility in Indonesia, Asia European Union Journal, vol.3, no.1, April 200524

Tri Widodo,European Presence in Indonesia, Asia European Union Journal, vol.5, no.3, September 2007
http://www.kemlu.go.id/Pages/IFPDisplay.aspx?Name=RegionalCooperation&IDP=15&P=Regional&l=enhttp://www.kemlu.go.id/Pages/IFPDisplay.aspx?Name=RegionalCooperation&IDP=15&P=Regional&l=en


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European Union as a single entity to conduct its interest businesses in Indonesia apart from the

ASEAN or Asia framework, which is just the way European Union desired. In addition, the

working system of the EuroCham also enable European Union to improve Indonesians

awareness of its supernational framework as a single entity, since it contains of 120 and more

companies of European Union member countries that shows Indonesians how European

Countries work as a whole under the European Union.

II.3 Indonesian Perspective towards EuroCham as an Economic Relation with EuropeanUnion

Indonesia, in the context of economic activity, is considered to have enormous

potential for investment. From the supply side, can be divided into short-term potential that

includes the presence of abundant natural resources, mining and agricultural commodities, as

well as a large amount of labor. And potential long term that refers to the development of

technology and quality of the human resources. Meanwhile, from the demand side, there is

great potential of the two factors as well, namely the large number of population and real

income per capita which makes Indonesia considered as a country with huge market potential.

But, post economic crisis that reach its top in 1998, Indonesia experienced a majorbreakdown especially on its economy sector, which led to a negative impact such as the

increasing poverty followed by the decreasing percentage of international world trust towards

Indonesia particularly in terms of investment activity. Although one or two years after the

1998 economic crisis, Indonesia's economy has showed a positive economic growth that prove

its recovery progress, but until now the average growth per year is still relatively slow

compared to the neighboring countries which are also affected by the crisis such as South

Korea and Thailand. The average is even much lower than the average growth per year ever

achieved by the government of New Order era (Orde Baru), especially in the period 1980s to

the mid-1990s.

One possible cause is the fact that the investment activities is still not intensive,

including external investment flows, especially in the form of foreign direct investment (FDI).

Within the group of ASEAN, Indonesia is the only country that experienced negative FDI


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22

flows since the 1998 economic crisis, which the further explanation will serve through the

statistic graphic and table below.

Figure 1: approved growth rate in forms of foreign investment and domestic investment, 1967-2005

Source : BKPM

Table 1: Nett value of foreign investment flows to indonesia, 1990-2004 (million US dollar)

Source : Bank Indonesia, Indonesian Final Statistics, 2005

First, according to World Bank report (World Bank 2005a) about the investment

climate, creating an investment climate requires an investment policy that address the

following three things: cost, risk, and the restriction of competition, which the government has

a very strong influence. Second, investment activity is in a dynamic and highly complex

business environment. Therefore, no matter how hard the government's efforts to create an

investment, or to attract foreign investment, will not succeed without considering the business

environment in a sector that being the destination of investments and the context of a broader


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economic development that creates "rules" for all activities or types of businesses and which

affect the way businesses and markets work.

Investment policies such as the 2006 Investment Policy Package will not mean

anything unless it is supported by other policies such as monetary policy, fiscal policy, foreign

trade policy, industrial policy, labor policy, and other. There are so many factors, where most

of all are interrelated to each other with a very complex pattern that could cause the slow

recovery of investment in Indonesia until this present. These factors ranging from what often

mentioned in the media, such as the security problems, lack of legal certainty, and poor

infrastructure conditions, up to a worsening labor conditions.

In a World Bank report on the investment climate (World Bank, 2005a) which has

been mentioned previously, among these factors, macroeconomic stability, the level of

corruption, bureaucracy, and the certainty of economic policy are the four most important

factor, which is where the research is then strengthened with the results of a survey of JETRO

on the factors inhibiting the growth of a business or investment in a number of countries in

Asia. This survey shows an overview of the major factors that hinder the investment climate

in Indonesia, namely the increasingly expensive labor (86.4%), followed by a system of

taxation that are difficult and complicated (72.0%), the uncertainty and no clarity of the policy

(67.7%), complexity of the trade procedures (67.6%), poor condition of the infrastructure

(54.7%), and the issue of labor (37.0%)25

.

Other than that, Indonesia is having several issues regarding the foreign direct

investments (FDI) according to at least 2 reasons, firstmost countries try to avoid unwarranted

dependence on one country for foreign investment due to the fear of foreign manipulation,

political sensitivities, and nationalist sentiment. Second, there is increased interest in alleged

differences in the behavior of foreign investors from different countries. According to all

those facts, the presence of European Union is actually giving several advantages to Indonesia

in certain aspects, especially in the investment sectors26

. Since European and Asia particularly

Indonesia are no longer isolated and has open to a wider cooperation framework. The

particular nature of these economic processes, which are driven more by direct investments

25Tulus Tambunan,Iklim Investasi di Indonesia: Masalah, Tantangan, dan Potensi, 2006, pdf.document

26Tri Widodo,European Presence in Indonesia, Asia European Union Journal, vol.5, no.3, September 2007


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from foreign sources then by traditional trading relations, has increased each countrys interest

in the economies of the others27

.

Looking back on how EuroCham works in playing its role here in Indonesia, which is

by opening a wider path of foreign investment especially from European country and also

making some kind of observational reviews on specific Indonesian industrial sectors for the

constructive recommendations and reports, Indonesia itself considered this cooperation

relation that established under EuroCham is helpful for its own national development.

II.4 Roles of the Normative Power of European Union Related to the Inhibiting Obstaclestowards the Practice of EuroCham in Indonesia

As the first initiator of the forms of new relation framework in the international wide

world, European Union has its own power of influence that commonly being adopted by most

countries in the world, or known as the normative power of the European Union. The concept

of normative power emerged from the debates associated with civilian power that it becomes

the identity of the European Union in playing its role on the international affairs. According to

Normative Power of Europe, the EUs identity includes five core, four minor norms, and also

several technical norms, that have developed since the 1950s28.

In the practice of EuroCham in Indonesia, it can be known that the cooperation relation

initiative was once begin primarily based on the one of the market power of Europe which is

part of the technical norms. This market power of Europe, is determining the European Union

as a single huge marketwhich consist of 27 countries, European Union as regulatory

institution, and European Union as the arena of investment contestation, that combined as a

characteristic and therefore, provides the European Union with the basis for its identity as the

market power of Europe

29

.

27Romano Prodi,Europe as I See it, Polity Press, United Kingdom, 2000, p. 87-92

28Ian manners,Normative Power Europe: A Contradiction in Terms?, Journal of

Common Market Studies, vol.40, no. 2, 2002

29Chad Damro, Market Power Europe, March 2011, pdf.document


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Regarding the aim of EuroCham itself, which promotes and supports European

business interests across the archipelago by seeking better market access and an improved

business environment in Indonesia for European companies, but at the same time it willing to

help Indonesia in reforming the domestic agenda for a greater transparency, efficiency, and

accountability, that primarily done through the accurate constructive analysis, reviews, and

recommendations by the sectoral working groups, which is the backbone of the EuroCham,

we can see clearly that this bilateral cooperation is not only driven by the market power of the

European Union norms only, but also supported by other normative power.

The other normative power that also contribute in running the bilateral cooperation

between European Union and Indonesia under the EuroChamwhich indicate through the

culture EuroCham cooperating system as a wholeare the whole core norms (peace, liberty,

democracy, rule of law, and respect of human rights) and minor norms social solidarity,

sustainable development, and good governance.

Using the virtue ethicsthat approaches European Unions principle by emphasizing

on virtues or moral character30

on my argument regarding this statement, is that the

extremely basic motive that driven European Union to initiate this cooperation is clearly to

gain a good relationship with Indonesia that may lead to the creation of peace among the

involved parties, which is based on the trade liberalization and also the Social and Economic

Solidarity value which underlines the need for strengthened partnership between rich countries

and poor countries to achieve the development objectives of the Millennium Declaration31

through the north-south relations that might formed. And the fact that EuroCham works in

the specific classified sectors, allowed European Union to promote the rest supporting

normative powers.

Somehow, EuroCham is allowing indonesia and European Union to deal with the

obstacles and barriers that stand in their way, which are:

30Ian Maners, The Normative Ethics of the European Union, International Affairs, vol.84, no. 1, January 2008

31John Richardson, The European Union in the WorldA Community of Values,

Fordham International Law Journal, Vol. 26, No. 1, 2002


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26

The difficulties of finding ways to accommodate differences in the high level ofpluralities that may cause disputes, without disrespecting the fundamental values

32

The overwhelmingly high standard that European Union countries have in terms ofimport activities

The lack of Indonesians awareness towards the visibility of European Union as asingle entity

The relations between neighboring countries in Asia that are often very tense, andEuropean Unions concerns over security in order to be a player on that stage

Related to the visibility as one of the obstacles, by the Quality centres of excellence

approaches in promoting European Union visibility in Indonesia, it indicate that European

Union is using the non-academic approach as a major effort in improving Indonesian

awareness of its supranational form. Because, known from Gunaryadis paperwork on the

Asia Europe Journal, that this non-academic approach is mainly by focusing on the research

and the non-academic activities like international conferences, workshops, research, and

publication that may function as a think-tank and provide inputs to national and regional

policy-makers. Specifically, the main objective is to improve a better understanding on the

European Union among Indonesian researchers, business people, policy-makers, and also the

civil society.

32Benita Ferrero-Waldner, Indonesia and the European Union: Building on common ground, Asia European

Union Journal, vol.5, no.2, June 2007


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CHAPTER III

CONCLUSION

Both Indonesia and European Union itself play an important role for each others

economic growth, through trades, export and import activities, investments, exchanges of

currency, debt and development assistance, and other businesses activities. Indonesia needs

European Union as a partner in counter balancing the growth of unilateralism, while

European Union itself needs Indonesia as a market of its commodities, while EuroCham is

being one of the tools that agreed and utilized by both parties to play each roles. This is the

reason why the cooperation relation between EU and Indonesia that established through the

existence of EuroCham in Indonesia, considered mutually beneficial towards both parties

involved.

The role of normative power in the enforcement of this cooperation relation under the

EuroCham is mainly driven by the Market Power of European Union which is included to

technical normative powers of European Union, and it also supported by other norms, which

are the core norms as a whole, and minor norms social solidarity, sustainable development,

and good governance.


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BIBLIOGRAFI

Books

Prodi, Romano. 2000.Europe as I See it, United Kingdom: Polity Press

Bache, Ian., George, Stephen., & Bulmer, Simon. 2011. Politics in the European Union 3rd

edn. United Kingdom: Oxford University Press

Journals

Ferrero-Waldner, Benita. 2007.Indonesia and the European Union: Building on common

ground. Asia Europe Journal. Vol.5. No.2

Gunaryadi. 2005.European Union Visibility in Indonesia. Asia Europe Journal. Vol.3,

No.1

Widodo, Tri. 2007.European Presence in Indonesia. Asia Europe Journal. Vol.5. No.3

Maners, Ian. 2008. The Normative Ethics of the European Union. International Affairs.

Vol.84, No.1

Manners, I. 2002 Normative Power Europe: A Contradiction in Terms?Journal of

Common Market Studies Vol.40, No. 2

Richardson, John. 2002 The European Union in the WorldA Community of Values

Fordham International Law Journal, Vol. 26, No. 1

Documents

Tambunan, Tulus. 2006.Iklim Investasi di Indonesia: Masalah, Tantangan, dan Potensi.

pdf.document

Erocham. 2011. Annual Position Paper. Pdf.document

Eurochams presentation. November 25th 2010. Seminar on Trade and Investment

Opportunities Between Poland and Indonesia. ppt. document

Damro, Chad. March 2011.Market Power Europe. pdf.document

EUROCHAM. Perdagangan Internasional, Pdf.document


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The European Union and the United Nation. Pdf.document

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