SOVIET BLOC ECONOMIC PENETRATION CF
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APPHQVIO FOR RELEASE DATE:9
-iry and Conclusion
I, -'ore Lgr.
IZi -ilno-^ovint Trad* rreaotionel
Agreements with Bloc
3. Permanent Trade
C. Participation ln Djakarta International Trade Pairs
III* Bloc Developmental Assistance to Indonesia
C- Rumania .
P. Tralnlnt Facilities Offered by the
' I. Local RspresenUtires Handling Bloc
World insistence snd
Indonesian trade5 with the ilne . Bloe. although iteall share of the total trade,iseable Increase overub years. During the past several years the Bloe countries -isv" node considerable efforts to laarease trade aad eooaoarle relations *ith Indonesia - These efforts have Included the csaeluslem of trade igrjeaeats, the esUbllahneat of peraaaent trade alsalonj, participationhe Djakarta International Trade Pairs and, sere recently, offers if technical assistance for Indonesia's ecoaoolo developnnnt- 6 the Bloc haa intensified Its efforts to develop oloser relations flth Indonesia In April the Soviet Onion oade its first concrete
osa! to give Indonesia economic assistance for development Id all .'lelda and in0 credit agreement was signed. ?wc agreenenta providing for Cieoh assistance were also aanouaeed in April. Preaideat Sukarno visited the Soviet Union and Communisti meals seat parliamentary missions to tbe USSR, Poland, Cteeboslo-vakla aad Ceosunlst China.
To date tbe Sino-Soviet Bloe has provided Indonesia with known credits3 millloa. Of this total, tbe USSR haa providedmillion and the European. The Soviet credit toktu will undoubtedly Involve large ahlpatents of capital eculpment A3 Indonesia. Following the pattern estabUahed ln India andtan, Soviet teohnlelans will probably be sent to nan tbe installations ia their initial phase of operations and to train Indonesians ln the jae of the equipment,,
Prior to the signature of the Soviet credit agreement lnloe teahnlcal assistance to Indonesia was Halted to anall-sealeoematructioaugarire factory and an eaanelware factory- Under the Soviet iredlt agreement, however, technical assistance will probably be extrudedhedevelops*at projects such aa hydroelectric installations-mines aad the development of nam ferrous metal ore deposits ell -jf whlehigh priority by the Iadoneaian 'lovernnert in Ita industrialisation program. The Soviet mission whleh will begin surrey work7 In the above fields will beosition to -tt-clae considerable influence inormat for their development
The amount of Bloc credit has been small coopered with the assistancehas received from the DS. Total US assistance to Indonesia0 haa amounted to8 millloa whleh0 ailllsn Frrort-Import Bank credit extended An agreenent osier Public, signed larovides an additional nnaillion to be used for eeonomie developnent purposes
With Indonesia's eocnomlo development severely handicappedack ol* capitalhortage or skilled peraonnel. It la apparent that InoOMala Will require appreciable outside aealatanoe If an extenaive development program la to ba undertaken. The Indonealan Government. In Una with ita nantrallat policy, has lndloaUd lta Mil]ingnaaa to racalTa aaalatanca froa any aouroe proTlded It eontalna oe jalltloel or nllltaxy ooamltnents. Indonesia will probably continue toarge share of lta oapital and technical asalatanoa receilre-aenta fron the Free World, but there la an Increasing raoaptlTity to Bloc offers of assistance. If the Bloc countries continue to asks offers which conform to Indonesia's expressed alma. Bloc aid will ecat lnue tc ba accepted.
I- Foreign Trade .
Bloc trade, aa shown in TableepresentedInsignificant percentage of Indonealn'a total trade. Indonesiantha Bloc countrieslthoughelatively small sharetotal trade,inaabla Increase Indonesianthe Bloc5srcant of total exports) to exporto41 percent of totalIndonealan Imports from the Bloc5 increased topercent of total imports)ercent Ths gradual increase In tbe volume of trade xithevidenced in tha first half5 was sotaewhat offsetecreaaetha second half, partially attribute bio to tho policy of the Hsrahsp ,which restrloted Caeah, Polish and Hungarian importscid-Decamber beoauaa of unfavorable trade balances. Tradethe firat half6 (Tableepetition cf thetorn. However, since new trade agroBoenta ire being concludedEuropean satellites which require psyaents lnplace of tho barter arringenentfl used earlier, It is not nowascertain whether second6 trade will tend to balanceexporta
Csechoalovakia, Conmunist China and Hungary are Indonesia'sBloc trading partner a. Rubber, copra, pepper, coffee,and coconut oil are exported to the Bloc countries inlight Manufactures notably textiles, cement, eotcrcyolea,
Of Indonesia's three principal exportubber, tin andnly rubber is exported to the Bloc, although under the current bloc agreements tin is Included on Indonesia's export lists. Evan though rubber accounted for approximatelyercent of total Indonealan exports to the Blocubber exports to the Bloc accounted forercent of total Indonesian rubber exporta. 6 low rubber exports began to evoke reactions in the Indonealan rubber producing areas. Further alarm was evoked by President Elsenhower's statement to Congress that the US could ba aalf-sufficient ln synthetic rubber productionears. 6 an Indonesian Cabinet decision to lift the eobargo on rubber shipments to Communist China was" nnounced. Although the Bloc provideselatively minor market for Indonealan rubber, it is apparent thatecline in rubber . ?h. exporta Indonesia will be under pressure not only to expand rubber
to the Bloc countries but also, with thc recent Indonesian cabinet decision, to take steps to open possibilities for the export of rubber to Ccranunist China* 5 tho Bloc took significantof certain agricultural products, as follows: ercent;A percent!8 percent;6 percent snd coconut4 percent.
5 show that textiles accounted for
about halfBloc exports to Indonesia, while cement and semi-
rinishedsteel accounted for aboutercent each, with
manufactures tanking up most of the balance.
Bloc supplies of textiles to Indonesia increased considerably Although tho Bloe had sold only aboutillion worth of textiles to Indonesia6 percent of total textilet soldillion worthncreasing Its share in this import market8 percent (sea Indonesia is highly dependent upon external sources for textiles since onlyercent of requirements are net by domestic production.
It is worth noting too, that existing American business practicee sre causing US suppliers to lose out to European exporters in the textile field. American suppliers refuse toirm contract for goods "subject to the issuance of an import license". Local importers In Hadan (coamercial center in Sumatra) are turning to European firms -ZiA'-h, Hungarian, Dutch and Westhich have indicated their willingness to enter into firm delivery contracts prior to the procure-asnt of sn import license (Csech and Hungarian representatives have been particularly active ln this respect). Under the Indonesian system of licensing, Indonesian import firms must, when they get an order, got Quotations from their suppliers and then apply for an import license at the price and in favor of the company quoted. This process is time-conaunlng and an import license, once granted, cannot be changed either in tens of price or source. If an American supplier of textiles raises tho price of his goods between theuotation is given and an import license is secured, the Indonesia importer must applyew licenseesultant daisy In delivery to local customers.
Tbe Bloc is not limiting its sales in the textile field to textiles alone. Czechoslovakia5 percent of Indonesia's imports of textile machinery Whereas Czech sewing machines comprised. percent of the total Importedheir share increased
%mMwwtrial* bar* not M;
atarta* aa artraaaWn wewrla* aaehiaa aad ton kTAttla* aaaahlrait lo tftn* TartUa anna arc* Institute in Batrtswj.
Tie* ofIfjaniiiail nTrernarlfci of It* textileHoc any ocntl*u* to ba am LnporUnt anryllaTiljnaiit. InTnfliniTrT-paretlcn and tha textile industry
-ia wn-lppad with00 anKAanloal0 hand 1dom. Inhat ha ad of lrktoneala's Textile Roaanroh Institute, Dr. Snfuln, accepted an invitation to riait a. Csecn textile anoMAarv axhiblt. Before hie' departure ba declared ths^lndrraflLs at that tin* had onlyercent of lte^adniaani raqulraaaeota of textiley Tha potential innmct oT (Ooeupon Indonai tsxtlla Industry la thorn fore slgnt flffitflt.
Sicv-Soviat Bio: countriesele of forte In Dabt several years lo pr .mote end increase economic relations with Indcne'.-e. these efforte hive Included the conclusion of tradethe establishment of permanent tr*do offices in Djakarta, active part I ttione Djakarta lorornational Trtde Fairs, and intenalfled advertising. nce *iie Jietaliatior. of the All governments, various1 trips have beento Bloc countries by the President and delegations of members of parliament.
A, rVgde Agreements with glgc Countries,
Indonesia currentlyo) has trade agreements withft, Czechoslovakia. *nd Communist China' -hare lapecial agreement oetweon the fiaat Semen Chamber of Foreign Trade and the Indonesian National Trade Organisation. Expired annual agreements with Hungary, Poland, Human la and Bulgaria are being renegotiated in the so-called "now teraa" calling for cash payments of charges rather than barter tyre cancellation of balances.
Under the All Government which held office from3 to5 government policy ladtrengthening of trade relatione with the Bloc. Cloaer trade ties wore negotlstsd as trade agreements were concluded for the first tins with Coassuniat China, Kumania, and East Germany. In5 theerresent began to show dlallluelcn-aent with Bloc trade: implementation under the agreements had not measured up to expectations; Indonesian products sold to the Bloc countries were being resold on the European markets at lower prices; and the Bloc, lo seeking outlets ln Indonesia, appeared to favor local Communist businessman. After the Harahap Cabinet took offiee in5 special tradehe parallel transactions* formerly uaad extensively with Castersere abolished. Government declarations Issued in5 Indicated that trade arrangements with tha Bloc countries had been unsatisfactory and had resultedeneral deterioration In the foreign exchange position. Tha Prime Minister,arliamentary debate, pointed out that raw materials exported to the Bloc had been re traded in other markets in direct competition with normal Indonealan exporta and that, under parallel transactions, Indonesian exports ware usually aold below world market prices with the deficit made up by charging Indonesian consumers mora for imports.
* Under parallel transactions the commodities of one country are exchanged for commodities of the other without transfer of funds.
The All gover-nment, which again took office in Aprilhaa indicated lta dlaaatiafaotion, firat expressed inith tha axisting Bloc trad* arrangementa. It haa formulated caw arrangements in which tha vol urns quo taa are revised and tha systems of payment madeew baals. Whether or not the ro lines of trade will be Increased under new agreements, the Bloc will probably continue to maintain its present volume of trade becauae of established connections with Isdonsslan businessmen and increased Indonesian familiarity with Bloc producta.
8. Permanent Trade Offices
Ctechoalovakia, Poland, Bulgaria, and Hungary have established fullfledged permanent trade missions In Indonesia, while East laiamalj and rnseania have had leas formal representations there. One of the functions of the trade missions apparently has been to find suitable agents or outlets, preferably Indonesian, for the conmodities being offered by the Bloc countries. See Appendix i"ibt of local representatives handling Bloc products.
aunmnj^.Trgdsn ths Latter part5 the Sumanian delegation to the 3rd InUrnatlonal Trade Pair announced plane toermanent trade office In Indonesia. In5 this delegation, composed of technological experts,ermanent display of aumanian productsumps, telecommunications equipment, and other machineryn Djakarta where demonstrations are arranged daily.
Catch [rader. Poisesk has been reported as ths principal officer ln the Catch Trade Miaalon which is attached to the Consulate Ceneral in Djakarta. Other information has listed B. Raaakommercial representative attached to the Consulate General.
East German Pradenformation ln5 reported that tne members of the trade representation of tho East German Chamber of Foreign Trade included Willi Sehildndier (fnuj. The address was listed aa Hotel dos Indts, Djakarta, cable designation "HAVD INDO".
Pollen fradenformation in5 stated that the permanent Pull ah Commercial Kission maintained an office at Djalan Indraneju Ho.jakarta. In6 Wlodrlnieraember of the Polish Trade Commission, was appolntsd Charge of the newly-eatablished Polish Embassy In Djakarta.
iarada offloa in Djakarta.
China, Cneehoslarvskls, last Germany, Hungary, Poland, and tsmmala participated in ths 3rd International Trada Pair hold In Djakarta fron LB6 Poland and Bomanla had only lnf orawtIon booths and Beat Cmrmeny exhibitedocal assart. While tha Bloc coonid not dominate tha Pair as thoy hadhey neverthelessary lmpreeeive aborning. The Cascha vera the noat aggressive In publicising their exhibit,ariaa of ads In local newspapera about the producta on display. Aa ln the past, the Bloc oouctrlea used the Pair for major propaganda purposes, exhibiting their products in an effort to convince Indonesia thay ware capable of supplying Indonesian re quire nenta for capital and consumer goods. Remarks made by some Indonealan officials and bualnees-aen indicated that China, Csechoalovakla, and Hungary had, to extent, succeeded In establishingonviction.
The Bloc countries have advertised axtenalTely to proaotetheir producta. Polish advertieeaenta appearing ln thehava listedolish trada organisations which claim to beide range of goods including heavy capitaland motor vehicles. The Cseeh Commercial repreaentatlvethe Caech Consulate General, In an effort to interest localHe can In Csech products, distributed toataloguewide variety of available producta. In Included amchineiy,light engineering producta, textiles and leather goods,glass producta. umanian delegation waa also ln Me danmachinerya crawlerriple-gang plow,snd other farm equipmentto the employees of the Officeln Horth
LUoc invalorsasntnl Assistance to Indonesia
Feonoaiie development bean piwn hifh priority byvvcni mattnited financialftT* pre TenB^fr1t*
Xncroase lnrata of capitalrivate rtp1 ts Tiflljn*prnai rlov lerel of forrrment investment. Qorerrraertal
rnrltUonad Intense natlonallsai and directedthaof all eonpanlea. has aoufht to Unit theof forelm Investors, Failurereealisticlav to err.vide rue ran tees aralnation, doubleaetrJcwnt of land concessionnd assurancee thatbebroad has discouraged reimrest^ent aa well asbyapital. Foreign aid prorran* have beer,Indonesianear of having restrictions lsivsnd onsnd freedom of actionensitivity to foreignthe sane tine Indoor-sia has not had the domestic rcsources'andto undertake an rate naive eeononic developnnnt profranoutside %
To date the Sino-Soviet Dloc haa
Ulloan Of this total/:the USSR has the Soviet credit rtfOgran willinvolve larfc ahlpmenta of capital equlrnent to Indonesia. Fbllovinr; the pattern established in India and Afghanistan, Soviet techniclnna will probably hc sent to .ran tne Installations ln their initial phase of operations nm' to train Indonesians in the use of thc equlpnent.
Jaormat for their development,
.assistance had been- carried out byBiBt Germany'It ^participate ln'IrjnWflla's_ Bloc aid pro grans are supported
Prior to tho sifnaturv .of theconorvlc aid agreementice technical assistance to Indonesia was United toroject* "the constructionuraranvas producinglrr*nd an enanelware factory. Under the Sovietn,7eenent, however, technical assistance will probably be extended torn-ecalrvdi as hydroelectric ins tails tione, coaX-ninsc and the developncnt of non-ferrnus netal ore depoalta all of which havalrh priority by the Indonesian Covnrrant In ita striailration prorran. The Soviet nisalon which will bcfln surveyn the above fields will beosition to ererclee^conaidorable
Anerran contractairned Inor th* torertrootionugar factory ln Jogjakarta (South Java). Th* sugar CfcsVry villapacityonear oar Ta hour* vith aadlatillary capacityona of aplrlt dailyv ,Jteported thatectares of landcres) will ba planted with fupar cane to supply Th* factory la to0 workers. The total cane grindlnc capacl^ per th "fiure ofursa- factories ia7 tons. Thearta laetory sill Increase total can* rrlMicaj capacity peroursercent.
of Indonesia, to provide adequate fimr.clnp and transportation
facilities for the exjuinnent, tha Test Gerraans will alnoat certainly be Waned.
data -there la no definite dato mrrtioned for the conpletion of the near factory although the central povernrant la anxious that it bo cxnaploted by ths ond Completion of thc plant will prinarlly depend on the availability of domestic financing irhich ia still
Sugar production In Indonesia haa steadily Increased since tha war,5 production estimatedomparedU. t. Domestic consumption rr^uirenenta have alnoat equalled annual production, however* Tha fallowing table shows Indonoaia'B donestic coruranqjtion of white sugar for
Tlic porta tructlon ol* the Pact Oernuthe prrvernnant'f
plane for agriculturalhe tI-hh purpoaaa of which arc to -aVe Indonesia self-eiLffielerrt In food and to increase the asportation of arri cultural produce In order to acquire foreign eocchanre.
efforts to provide technical assistance for Indonesia's ecoQiolc development met with vary little aucoess Only one ssal'-acale project, the constructionanvas-producing- undertaken vith Csech ssalatsne*. ) article Inorting; on this project, indicated noat of tbs textile machinery hex! arrived and Csech technicians ware assisting in the mounting and
Indonaaian Economic Ministry | onthat the Csech Government badrertcredltthe Indonaaian Government under which credits vould be grantedfor tbe eatebllibment of auch Industries as steal,lisa, glaea, paper and pulp, and fertiliser. Ths Foreignstated thisevision of tha draft on which the countrlaeto agree in of credit ia notto
bo reachedroject-by-project basis. Tbs terms cell for payment In sterling withercent down,ercent on tbe first shipment and the balanceeal-annual installments. Tbs draft envisages tba use cf Csech technicians whose expanses will be paid In local currency. Tba agreement was signed onay and tbs press reported the first credit under the agreement was6 million credit to theTire snd Rubber Company.
Tha credit will be used by tbe Indonesian Tire and Rubber Company toire factory In Djakarta. ontract for this purpose was signed between tbe Bank of Industry and ths Csech firm, Teehnoexport.
ia RpillionOO). Equipment valued at Rpillion) ls scheduled to arrive ln Djakarta in The plant, scheduled to begin operatlona ine toires per day In two6 for Jeeps, light trucks and
ears,0 for heavier truck*. Tha existing factory in Indonesia, operated by Goodyear, producesotor vehicle tires per day and supplies aboutercent of tbe market.
In6 Prague announced tba conclusionecond contract by Technoexport (under tbe Csech credit agreement) for tbe construction of an enamel ware factory which ia to turnons of enamelear. Tbe Csechs are to deliver the complete equip-ment including an electricat loo. Csech technicians are to Install the equipment and train Indonealan worker* in tbe serricing of ths machinery and in production methods, according to press reports, part of tbe enamel wore factory equipment has arrived In Indonesia.
Chechoslovakia ls continuing to exert conaiderabla effort to
anIn tbs use of Csech ind us tr lei machinery ordered bythere are two Csech technician* working, without pay,In Eaat Java province, testing bulldosers, heavy trunks,ordered from Cseoboalovakla by the East Java Public The equipment, valued atill beLed iii residency in south Java for use ln construction work ooRiver flood oontrol project and tn ths digging of a
' C. Rumania
kagreement of4rovision for Rumanian assistance in tbe aoustructionement mill, inue lis and working mineral deposits.
already has one cement plant in operation and construction worksmsnt at Gresik, near Surabaya (Easthich ls being financed by anBank loan. Antlolpated production of tha Gresik plant, added to current production, ia expected to bring Looa^cemsnt^utputoLoseto tba present demands of tbe domestic market.
Htbe plant Groaik will save Xndoneela approximately to sillionper year ln foreign exchange. Construction of this third plant would make Indonesia self-sufficient In cement and night evenurplus for export. It also would have theresult of displacing Bloc exporta of cement ln Indonesia. Over half of Indonesia's total cement Imports ia tbs first half5 vere supplied by tbe Bloc. Of total Bloc exports of cement to Indonesiapproximatelyercent was suppliedecSlovakia,ercent by Rumania, and tha remainder by Poland and Hungary.
cessions, subject to change
Lndonoala'a failure to es;lsable drawback for foreign investora. Ohder present conditions each foreign first must make separate arrangements for con-
all of which aro
D. Tha Soviet Union
Joint talks on tha USSR's offer or technical and economicplac* in Djakarta In One stumbling block toof the talks appeared to be the question of re para*ntloan* The Indonesians wanted repayment to begin after thecompleted, tut the Soviets wanted repayment to begin when theshipped. Proposals made by the Soviet delegation or somaincluding0 million, were
consistently rejected by the Indonesians on the basis of the Incomplete status ofear plan.
The Sovlot-Indonesian economic and technical aid agreement was signed on The agreement providedoviet line of credit equivalent0 million for industrial projects. The credit which will be repaidyear period atercent interestears after the loan has been mads ls payable in sterling or Indonaaian raw materials. The Soviets will make experts available for research ln peaceful usea of atomic energy and will train Indonesians in this field. It was announced that Soviet credits would be used for financingovernment-operated projects In the electric power, coal, chemicals, pulp snd paper, and cement industries. Separate agreements are tc be concluded later for specific projecta.
A Soviet mission, scheduled to be sent to Indonesiaill start preliminary surveys of the coal, nonferroua metal, hydro-
3otli Po!and aad Cwwaliri Chin* rare ?idv *a ualafejuce io Tsdonaait.. Tlie
to ladorJBia uin-.uncac6 thatin
industrialortile manufacturing aid to lida studying tea Folish offer.
ecasiuDHas oa tba renewal orconsunitt Chicsns-Irjlonssiar trade pTSBs-n: revealed that raising offered to trala Irslocssians to tha una of llg'at Industrial st liljsjacich It wcuid rare araiiablc 'indor the agrsenoat..
The Sloe countries havef jcfcolerahip-jfor .fpecialised studies in CoRSr_iist
East Gercany grantedcholarships for study
univeroitieaCacr;hoolovaxiao Jadocssirji Tht Chairaan of to* Indonesian Industrialtated ix.6 that5 the USSRtaoiing offar ofoholarships for technical trainingcholarships ror industrial training at Etuaaian universities and technical institutes. The 3csrd ls planning to sendtudenta to tba USSR7 for incuetribl training, Tha departure in6 ofndwy^iaa atudcats far the USSR and Poland to study under scbolexohip*ested*ed due tc th tens* ta'ernatlocal situation.
The Icdcnssian Gcnr-swat ia avarc that it auet trmtVOB ita shortages of trained personnel in ordsr to succ?=ofntl^jont itselopnent progran.. Oca of tne steps tbs swine arttakan in the iJEpanalon of itsprcrr iu jear. tc joac Indonesian jtadscts to colleges and graduate sohoolj abroad.
Albrrrla Balggana. CtaKtbo*Ior&xzU Cgrnmny jfjafjflry Poland
Scijroe: Department of CVaantrse, Bnrnau of foreignOhclaaalfled
Silk Tares for waving Cotton Tarn and thread Tarn of syn. staple fibers Cotton fabrics, standard type Pabrloa of fine animal hair, pare or nlxad vith tax. fibers other than silk and syn. not incl. laoea, ribbons and epao. fab. for tech. use
Fab. of syn. tax. flbara,
standard type, not lncl.
and narrow fabrics Curtains, upholstery and
drapery net.,Lac*ace, trims,
ribbons, and other aim.
of ootton Spec, textile fabrics, said
related products Hsld. linens; blankets and
coverlets of ootton and
of fins animal hair
Total from World Total froa Bloc frrceot
Tarns for weaving
yarn for waving, singlo.
sowing thread, other
oa reals snd clews
fabrics, stand type, not
narrow and spoc. fabrics
of fine animal hair.
or mixed with text.
other than sillc or
not lncl- pile.
fsb. for tech. use
and aim. fsbrics
cables, cord, sail twine.
thread and fiahnet
silk gauss, filter
trans and conu. belts
sim.. used for
of ind. acc.
blankets and coverlets.
TUUTd for Bio* Praducta
f. OattlixCo, Gussiag Sahard Fire* Sjan udjl Bejam, Wturok 31
/ HI PerlBtlB, Djalaa SVriUKia V. MASS, Djalaa Djeadrel Sudirnaa ff*liay, Petjeaemgan
Bardjasarl,jalaa Aasin Baru
Alpine, Kreaat Rajav. Znioprcs,jalaa Gadjah hada
Ichaaal,jalaa Orpaaram Iaol, C, V,
Plrna Autateohalcun Uideaeyer, Djalaa Raja Kramat 74
N.apolalr, Paear Baruahmey
P. D. Boras, Djalaa Djoaja 12
Skeda aad Taa meehiar. teola
Chennpal dyead industrial chemicals
Sksda aad Slavia aagia^s
Skods aad Motokov Mstar
vsbielea Java bicycles aadhe* machinery. Bras
CVsmpel Pharmaceutical Chemicals
Sola agent for sals af machinery exhibited at 3rd Isteraatiomal Trade Pair
Sale re pre s* statin- fsr the TfA auto faotory iamaay
Tungsram light bulbs aad radio tubes
Sole agent for textiles
Sol* agent far cement
orld As^iatuee ud Iamttaeit (Other thu ISI
ef the Iadoaesiaa Covermioent to provide the accessary guarantees Tor foreignagalaat aatioaallaatioa aad double taxation, aettleaamt of land concession rights endthat profits can be transferreddiscouraged rein-vestaeat aa veil as nev Investnent bv foreign capital. The withdrawal of Dutch capital, prlnarlly Invested la rubber plantatioaa, haa been noat extensive, but4 British and US Interests alao aanouncrd their lateatlons of liquidating particular holdings. OS petroleun Interests-Standard Vacuus) and Celt ax-expect, however, to lavest0 aillloa In Indonesia over the next four or five years* Hsathly transfer of profits ls tied to cossHtiD-stB of aev lavestmeat0 million by Stanvae andill ion by Caltex*
On6 the Indonesian press ardicunced Indonesian and Japanese governmental appreval for the establishmentointIndonesian National Recenstruetloa Bank. The bank willapital ofillion rupiahs49 percent of which will be providedapanese company aadrrceat by private
La fereiga exchange transactions, but it uill lend money for tbeof Indonesia's petroleum Industry, laterialand shipping services, and other Industries.
Inontract to finance maebiaeryiee straw paper mill In Central Javaour-year credit was concluded between the State Industrial Bank and aa Italian firm "Cellulose Pemille." The mill, scheduled to opes bys to have an aaaual eapaeltyeas. econd State Iadostrlal Baak prajeit, for an asbestos earnest factory aear Gresikat Java) ia ts have Italian teehnioal aid and finanelal aid from New Zealand under tha Colombo plan. New Zealand assistance has also been reported for pi amwrf tannery aad glass factories. The Indonesian foreign eredits committee bas aaanumwed the continued opportunity for capital goods imports under leng-tera credits from the Nether lands. West Germany, France, Sweden. Italy, Chechoslovakia, the IS aad the US.Original document.