VZCZCXRO9357
RR RUEHCHI RUEHCN RUEHDT RUEHHM
DE RUEHJA #0811/01 1280712
ZNR UUUUU ZZH
R 080712Z MAY 09
FM AMEMBASSY JAKARTA
TO RUEHC/SECSTATE WASHDC 2291
INFO RUEHZS/ASSOCIATION OF SOUTHEAST ASIAN NATIONS COLL
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHDC

UNCLAS SECTION 01 OF 02 JAKARTA 000811 
 
SIPDIS 
SENSITIVE 
 
DEPT FOR EAP/MTS, EEB/IFD/OIA 
USTR FOR KELHERS, BWEISEL 
 
E.O. 12598: N/A 
TAGS: ECON EINV ETRD ECON ID
 
SUBJECT: Indonesian Trade Minister Visit to Washington 
 
¶1. (SBU) Summary:  Trade Minister Mari Pangestu's visit to 
Washington offers an opportunity to identify specific goals for the 
trade and investment pillar of the proposed U.S.-Indonesian 
Comprehensive Partnership.  Although they stress the importance of 
this pillar, Indonesian officials have not yet articulated a 
substantive agenda to pursue.  Indonesia has made good progress in 
resolving a number of bilateral issues including the Time court 
ruling and the resolution of Intel's intellectual property rights 
grievance.  However, a series of protectionist policies have 
overshadowed these measures.  We see two areas where we can advance 
U.S. interests during next week's trade and investment framework 
discussions: investment and the film industry. 
 
Comprehensive Partnership 
------------------------- 
¶2.  (SBU) President Yudhoyono proposed the idea of a U.S. - 
Indonesian comprehensive partnership in November 2008.  Secretary 
Clinton endorsed the idea during her February visit to Indonesia. 
Both sides expect to announce the launch of the partnership during a 
possible President Obama visit to Indonesia in November.  The 
proposed comprehensive partnership consists of three baskets: 
political and security cooperation; sociocultural, educational, and 
technological cooperation; and economic and development cooperation. 
 We have not yet agreed on any concrete goals.  We should ask 
Minister Pangestu for her ideas. 
 
¶3. (SBU) Recent protectionist moves have overshadowed Indonesian 
progress in resolving several long-term issues.  The Indonesian 
government helped Intel resolve its fifteen-year old trademark 
dispute.  The Indonesian Supreme Court overturned its earlier ruling 
against TIME magazine in a libel case brought by former President 
Suharto.  And, working closely with the Embassy and Ex-Im, the 
Indonesian parliament passed a new civil aviation law implementing 
the Cape Town Convention, paving the way for more than a billion 
dollars of Ex-Im financing of Boeing aircraft.  APP reached an 
out-of-court settlement with Oaktree Capital to resolve a long-term 
financial dispute. 
 
¶4. (SBU) Indonesia has simultaneously instituted a string of 
protectionist measures in the wake of the global economic crisis. 
Regulations on import licensing, pharmaceutical licensing, local 
content for telecommunications projects, use of domestic banks for 
letters of credit, restrictions on the sale of offshore financial 
products and local print requirements for films have all created 
hurdles for U.S. companies seeking to do business in Indonesia.  We 
have fought these measures with some success.  Indonesia has delayed 
implementation of some of the measures and offered exemptions for 
specific U.S. companies in other cases.  On the import licensing 
regime and the local content requirements, we have worked with other 
countries to raise questions at the World Trade Organization. 
 
¶5. (SBU) While we must continue to vigorously defend U.S. companies' 
interests where there are trade and investment barriers, we should 
also use the potential comprehensive partnership to explore areas of 
mutual benefit.  We suggest two topics, both of which will be 
discussed in next week's trade and investment framework agreement 
talks: investment and the film sector. 
 
Investment 
----------- 
¶6. (SBU) Indonesia has lowered its foreign direct investment 
projections as a result of the global economic crisis.  Two 
bilateral agreements could help attract U.S. investment: a renewal 
of the OPIC agreement and a possible bilateral investment treaty. 
Both agreements will be discussed at the working level during 
Minister Pangestu's visit.  Our ambitious goal should be to use 
President Obama's potential visit to attract U.S. investment to 
Indonesia.  We should aim to use a possible POTUS visit to sign an 
updated OPIC agreement and announce the launch of formal 
negotiations toward a BIT.  Simultaneously, we could announce an 
OPIC-sponsored regional investment conference for spring 2010. 
 
Film Cooperation 
----------------- 
¶7.  (SBU) Minister Pangestu is personally dedicated to developing 
Indonesia's creative industries, especially the country's film 
sector.  There is also renewed interest from U.S. companies to 
invest in film in Indonesia.  Minister Pangestu will be meeting with 
officials from Newscorp/20th Century Fox and the Motion Picture 
Association during her trip to Washington.  They will discuss a gala 
event/film festival that Newscorp plans to sponsor in early October 
to advance their interest in pursuing film sector opportunities in 
Indonesia.  Meanwhile, the Ministry of Tourism recently suspended a 
decree which required that all theatrical movie prints exhibited in 
Indonesia be processed locally.  Lastly, many domestic film industry 
stakeholders welcome the prospect of increased foreign investment, 
 
JAKARTA 00000811  002 OF 002 
 
 
in contrast to the protectionist reflex that characterizes most 
other business sectors.  We should push Indonesia to remove all 
foreign ownership restrictions in the film sector and to establish a 
"one-stop shop" film service agency to facilitate foreign companies 
considering Indonesia as a filmmaking destination as important first 
steps in attracting Hollywood's interest. 
 
HUME