TABLE OF CONTENT TABLE OF CONTENT....... 1 JOURNAL ANALYSIS 2 1. Indonesia and the European Union: Building on common grou . 2 2.

European Union Visibility in Indonesia 3 3. European Presence in Indonesia 4 4. The Normative Ethics of the European Union . 5 5. Europe and Asia at the Turn of the Century 6 MIDTERM PAPER PROGRESS REPORT 8 Abstract. 9 Introduction I. Research Background. 10 II. Research Question.. 11 III. Conseptual Framework.............. 11 IV. Hypothesis.. 12 FINAL 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. 17 II.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

JOURNAL ANALYSIS

1. Indonesia and the European Union: Building on common ground1 The 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
1

Benita Ferrero-Waldner, Indonesia and the European Union: Building on common ground, Asia Europe Journal, vol.5, no.2, June 2007

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 between Indonesia 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 Indonesia2 In 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 social sciences 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
2

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

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 Indonesia3 For 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 Union is 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, first most 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

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

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 dominates by 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 and relation within the member countries. 4. The Normative Ethics of the European Union4

Sees 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

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

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, first is 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 Century5

In 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
5

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

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 the world 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 promises a 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.

MIDTERM PAPER PROGRESS REPORT

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 and Indonesia, 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

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
6

EUROCHAM . main page (online), http://www.eurocham.or.id/index.php?option=content&id=76&lang=id accessed 29/10/11 10:20 7 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 09:29 8 Pdf EUROCHAM .Perdagangan Internasional (online), http://pp.eurocham.or.id/pdf%20bahasa/Bab%2013%20-%20Perdagangan%20Internasional.pdf accessed 29/10/11 10:11

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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 Question Question analyzed in this paper is :

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

III.

Conceptual Framework Several 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 the former 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.
9

Second 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.pdf accessed 31/10/11 18:00 10 Personal note from earlier class in the 2nd semester, Area Study subject.

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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.

12

FINAL PAPER EUROCHAM : Mutualism or Commensalism?

13

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,
11

EUROCHAM . main page (online), http://www.eurocham.or.id/index.php?option=content&id=76&lang=id accessed October 29th 2011 10:20 12 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 09:29 13 Pdf EUROCHAM .Perdagangan Internasional (online), http://pp.eurocham.or.id/pdf%20bahasa/Bab%2013%20-%20Perdagangan%20Internasional.pdf accessed October 29th 2011 10:11

14

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 only advantageous to one side? 3. What is the normative power of EU that directly driven this cooperation relationship?

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.

14

Ian 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 Union visibility 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.

15 16

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

17

Erocham, Annual Position Paper, 2011, pdf, document

17

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
18

Eurochams presentation, Seminar on Trade and Investment Opportunities Between Poland and Indonesia, November 25th 2010, ppt. document
19

Erocham, Annual Position Paper, 2011, pdf, document

18

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 Group 2. Infrastructure Working Group 3. National Single Window Working Group 4. Transport & Logistics Working Group 5. FMCG (Fast Moving Consumer Goods) Working Group 6. Chemicals & Pharmaceuticals Working Group 7. Automotive & Tires Working Group 8. Tobacco Working Group 9. Property Working Group 10. IPR (Intellectual Property Rights) Working Group 11. Security Working Group 12. Finance Working Group 13. Sustainable Development Working Group 14. 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.
20

Eurocham, Working Groups, <http://www.eurocham.or.id/index.php?option=com_content&view=category&layout=blog&id=55&Itemid=117 >, accessed December 29th 2011 20:32

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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
21

Ian Bache, Stephen George, & Simon Bulmer, Politics in the European Union 3 edn, Oxford University Press, United Kingdom, 2011, p.500-503 22 Ministry of Foreign Affairs, European Union, <http://www.kemlu.go.id/Pages/IFPDisplay.aspx?Name=RegionalCooperation&IDP=15&P=Regional&l=en>, accessed December 29th 2011 20:46 23 Gunaryadi, European Union Visibility in Indonesia, Asia European Union Journal, vol.3, no.1, April 2005 24 Tri Widodo, European Presence in Indonesia, Asia European Union Journal, vol.5, no.3, September 2007

rd

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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 European Union

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 major breakdown 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
21

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, first most 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

25 26

Tulus Tambunan, Iklim Investasi di Indonesia: Masalah, Tantangan, dan Potensi, 2006, pdf.document Tri 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 Obstacles towards 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 Europe29.

27

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

28

Ian manners, Normative Power Europe: A Contradiction in Terms?, Journal of Common Market Studies, vol.40, no. 2, 2002
29

Chad 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 character30on 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:

30 31

Ian Maners, The Normative Ethics of the European Union, International Affairs, vol.84, no. 1, January 2008 John Richardson, The European Union in the WorldA Community of Values, Fordham International Law Journal, Vol. 26, No. 1, 2002

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The difficulties of finding ways to accommodate differences in the high level of pluralities that may cause disputes, without disrespecting the fundamental values32 The overwhelmingly high standard that European Union countries have in terms of import activities The lack of Indonesians awareness towards the visibility of European Union as a single entity The relations between neighboring countries in Asia that are often very tense, and European 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.

32

Benita 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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Second Pan-European Conference Standing Group on EU Politics Bologna. 24-26 June 2004. The European Union and the United Nation. Pdf.document

Internet Accesses EUROCHAM. main page (online), <http://www.eurocham.or.id/index.php?option=content&id=76&lang=id>, accessed October 29th 2011 Putera Sampoerna Foundation. BERBAGI PENGALAMAN MEMAKSIMALKAN CSR DI EUROCHAM 2011, <http://www.sampoernafoundation.org/index.php?option=com_content&view=article&id=57 6&Itemid=6&lang=in>, accessed October 29th 2011 Eurocham, Working Groups, <http://www.eurocham.or.id/index.php?option=com_content&view=category&layout=blog&i d=55&Itemid=117>, accessed December 29th 2011 Ministry of Foreign Affairs, European Union, <http://www.kemlu.go.id/Pages/IFPDisplay.aspx?Name=RegionalCooperation&IDP=15&P= Regional&l=en>, accessed December 29th 2011

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