Turkey and Indonesia: Historical Roots, Contemporary Business Links

By Altay Atlı | Coordinator - Asian Studies Center - Boğaziçi University | Nov 04, 2013
Turkey and Indonesia: Historical Roots, Contemporary Business Links
Aftermath of Indonesia's 2004 tsunami; Turkey provided aid.

Though sympathy between Turkey and Indonesia has a long tradition, in part based on their shared experience of being Muslim-majority countries that successfully executed anti-imperialist struggles, for years this sympathy has failed to translate into a closer relationship. This is now changing. New economic linkages and the relative absence of thorny political issues are bringing them closer together. As President Abdullah Gül stated during a meeting in Jakarta in 2011, “A new era is beginning with Indonesia.”[1] Economic agents such as businessmen and entrepreneurs are the pioneers of this era.

Turks are actually not newcomers to the Indonesian archipelago. The first encounters can be traced back to the early sixteenth century when the Portuguese dominated maritime trade across the Indian Ocean. The Portuguese naval power threatened not only the spice trade between the Sultanate of Aceh (located in modern-day Sumatra) and the rest of the world, but also the safety of the pilgrimage routes of Acehnese Muslims on their way to Mecca. In 1538, the Sultan of Aceh, Alauddin Riayat, approached the Ottoman Sultan Suleiman the Magnificent, who also held the title of caliph, asking for help against the Portuguese threat. He received not only weapons and ammunition from the caliph, but also military instructors, housing and construction specialists, and other experts. It was the beginning of a long period of military cooperation between the Ottoman Empire and the sultanate. Closer diplomatic relations soon followed, culminating in the first exchange of ambassadors in 1547.

After the sixteenth century, relations between the Ottoman Empire and Aceh entered a period of stagnation, mainly due to the fact that the Ottoman Empire was weakening and naval expeditions were less justifiable. With the loss of Ottoman influence in Yemen in the mid-seventeenth century and the consequent closure of ports, the sultan’s armada left the waters of the Indian Ocean for good. However, Turkish influence in Sumatra and to some extent the other islands of the archipelago remained intact. The Sultanate of Aceh became a regional power thanks to the military it built on the Turkish model.

The nineteenth century in Southeast Asia was marked by the colonialist ventures of Western powers, led by Britain and the Netherlands. Several sultanates such as Aceh and Riau saw Ottoman protection as a better alternative to dominion by a Christian power. 

The first Ottoman diplomatic mission in Southeast Asia was in 1864 in Singapore, and another Ottoman consulate opened in Batavia (modern-day Jakarta) in 1883. These missions were part of Ottoman efforts to promote an Islamic union. While the Dutch administration did not initially object to the opening of the Batavia office, they became increasingly concerned about its activities and took measures to limit Ottoman influence on the Muslim population. To a great extent, they succeeded. When the Ottoman sultan proclaimed a “holy war” at the onset of the First World War and called on Muslims to join the fight, the Dutch ambassador in Istanbul protested by claiming that the Netherlands remained neutral and therefore the holy war must not require the mobilization of Indonesian Muslims. The government of the Ottoman Empire responded by revising the text of the holy war proclamation to exclude Indonesian Muslims.

The war resulted in the collapse of the Ottoman Empire and the partitioning of its territory. The Turkish resistance led by Mustafa Kemal Atatürk managed to rid Anatolia of the occupying forces, and the Republic of Turkey was founded in 1923. Indonesians were among the first to celebrate the defeat of the imperialist forces and the birth of a new nation in West Asia. Indonesian leader Mohammad Hatta wrote, “In their struggle for independence the Indonesian people found new inspiration and a source of strength in the victories won by the Turkish people under the leadership of Kamal Ataturk. Ankara was regarded as the Mecca of modern nationalism. The victories of the Turkish Army at Sakaria and Afyon Karahisar will remain in the memory of the Indonesians as momentous events that determined the course of history: the dawn of Asian freedom was beginning to break.”[2]

Yet after Indonesia gained its independence in 1949, Turko-Indonesian relations slowed. Turkey adopted a multiparty democratic system, went through three military coups and several economic crises, aspired to Westernize, and ultimately aimed to become a member of the European family. In the meantime, Indonesia went through three decades of Suharto’s autocratic rule marked by corruption, the Asian financial crisis, and consequent economic and social troubles. As such, both countries were preoccupied with their domestic affairs and did not focus on international diplomacy.

Two historical processes that developed simultaneously laid the groundwork for Turkey and Indonesia to embark on a new chapter in their relationship. In Indonesia, Suharto’s autocratic rule ended in 1998 and the nation entered a period of democratization. With this change, Indonesia’s foreign policy took a pragmatic turn in that Jakarta began to actively pursue external relations at both a bilateral and multilateral level in line with the needs of its growing economy.

In Turkey, the political and economic instability that plagued the country during a series of weak coalition governments came to an end when the Justice and Development Party (AKP) took office in 2002 as a single-party government with a parliamentary majority. The AKP government has drastically transformed the economic and political scene in Turkey, and foreign policy has been no exception. Turkey left its Western-oriented foreign policy paradigm and developed an approach that engages not only with the West, but also and mainly with the developing parts of the world, including the Asia-Pacific region.

In the early 2000s, the stage was set for Turkey and Indonesia to increase their relations. All that was needed was a trigger to ignite the process, and this came in the form of the tsunami disaster of 2004. Turkey was one of the countries that helped tsunami survivors in Indonesia. Donations collected all over Turkey were wired to Aceh; Turkish volunteers, relief teams, state agencies, and NGOs poured in to the region, opening food distribution centers, bakeries, medical facilities, and even small schools. The Turkish Red Crescent undertook the construction of 1,050 residential units and service buildings.[3] Moreover, the Turkish government promised permanent investment in Aceh, which soon materialized through the opening of Gampoeng Atjeh-Istanbul, the “Istanbul Village” that provided shelter for families as well as an orphanage, school, and small mosque.

The tsunami disaster not only increased the mutual sympathy that already existed between the two nations, but more importantly brought Indonesia to the attention of the Turks, including Turkey’s business community. Indonesia was in a sense rediscovered as a place not only to feel close to, or to help, but also to do business with. Gökşin Duman, coordinator of the Asia Pacific department under the Foreign Economic Relations Board of Turkey (DEIK), notes, “After 2004…Turkish companies began by importing local products from Indonesia, and in time, parallel to changes in Turkey’s international investment portfolio, companies began investing in Indonesia in order to benefit from proximity to raw materials and the large consumer base.”[4]

In short, the tsunami disaster brought not only Turkish aid to Indonesia, but it also opened a channel for Turkish entrepreneurs to enter the large Indonesian market and explore business opportunities within it.

One of Turkey’s business pioneers in Indonesia is Galip Kayar, managing partner of a foreign trade company and member of the Indonesia committee of a Turkish NGO, the Association of Solidarity and Cooperation with Pacific Countries (PASIAD). Having lived, studied, and worked in Indonesia for 15 years, Kayar believes that while cultural affinity is absolutely an advantage, a solid relationship can only be possible if and when long-term economic linkages are established. “You cannot really know people if you do not do business with them,” he says. “You should open factories there, and people will then come there to work, and they will really get to know you.”[5] Kayar notes that another binding factor between the two countries that complements the business links is Turkish schools operating in different provinces of Indonesia. Twelve such institutions of secondary education are currently active, teaching in Indonesian, English, and Turkish. He explains that students become goodwill ambassadors for Turkey, and they are also sought after by corporations doing business between Turkey and Indonesia.

Trade statistics reveal the growing economic relationship between the two countries. Between 2004 and 2012, the bilateral trade volume increased by an annual average of 14.8 percent, increasing from $623 million to $2.1 billion.[6] From a Turkish perspective, this figure is still low compared with trade with other Asian economic powerhouses like China, but two important points should be made. First, growth in Turkey’s trade with Indonesia has outpaced the overall growth of the nation’s foreign trade volume, which over the 2004-2012 period went up by an annual average of 11.7 percent. In other words, Indonesia is a rising market for Turkey.

Second, while Turkey has a trade deficit with Indonesia, the gap is narrowing, with exports growing faster than imports. Between 2004 and 2012, Turkey’s exports to Indonesia scored an average annual increase of 20.7 percent, while this ratio was 14.1 percent for imports. Indonesia may not be a major market for Turkey at the moment, but it is definitely a growth market in which Turkish companies are increasingly interested.

A similar trend is occurring with Turkish investments in Indonesia. While there are only a few large-scale enterprises with Turkish capital currently active in Indonesia, the number of small-scale individual entrepreneurs entering the Indonesian market is rapidly increasing and a number of large projects are in the pipeline. During Indonesian President Susilo Bambang Yudhoyono’s visit to Turkey in late 2010, seven joint project agreements were signed between major Turkish and Indonesian corporations, covering industries such as airport management, construction, mining, agribusiness, and geothermal energy. Notable among these is Turkey’s Hitay Investment Holdings, which is currently preparing for major energy investments in Indonesia.

Thus, Turks are increasingly interested in Indonesia, and business entrepreneurs are pioneering this interest. However, for individual enthusiasm and enterprise to transform into cumulative effort and affect existing foreign policy, two conditions need to be met. First, a strong institutional framework must be created within which economic activities can be conducted. Gökşin Duman from DEIK points to intergovernmental agreements signed over the past few years, which have helped to consolidate the legislative framework of the economic relationship, as progress in this respect. “The reciprocal lifting of visa requirements, increasing frequency of official state visits, and the regular meeting of the joint economic commission have been extremely helpful,” she says. “There is now a great deal of institutionalization in the way the relationship with Indonesia is conducted.”

The second important condition is fostering efficient state-business coordination. While the efforts of individual entrepreneurs are an important factor bringing the two countries closer, these efforts need to be coordinated with the state. Essentially, the business community in both countries needs to be able to effectively communicate its needs, demands, and opinions to the state, and the state needs to incorporate this feedback into the formulation of its foreign policy. At this point, associations that represent the business community enter the scene. The Turkish-Indonesian Business Council, which operates under DEIK, had been inactive since its inception in 1995; however, it reactivated in 2007 and now acts as a platform of dialogue between Turkish businesses active in Indonesia and the Turkish state. Other associations, such as the Turkish Exporters Assembly (TIM) and the Turkish Confederation of Businessmen and Industrialists (TUSKON), which represent tens of thousands of Turkish companies of various scales, are increasingly active in Indonesia, helping to coordinate the efforts of the business community with the government’s foreign policy openings.

After remaining dormant for decades, relations between Turkey and Indonesia are currently undergoing a process of revival. Having a Muslim majority population and sharing a common heritage that can be traced back to the sixteenth century surely helps bring these two countries together, but the economic ties and the role played by business pioneers are the factors really cementing the relationship. Turkey and Indonesia may currently be in the early stages of rediscovering each other, but as they continue to come together, their stronger partnership will likely impact the regional and global balance of power.  

This contribution is part of the Middle East-Asia Project at the Middle East Institute.

[1] Speech given by President Abdullah Gül at the Turkish-Indonesian Business Forum meeting held in Jakarta, 5 April 2011. Full text of the speech available at http://www.tccb.gov.tr/konusmalar/371/79701/turkiyeendonezya-is-forumu-toplantisinda-yaptiklari-konusma.html.

[2] Muhammad Hatta, “A Message to the People of Turkey,” Koleksi Muhammad Hatta 2, 35 (1950), Arsip Nasional Republic Indonesia, Jakarta. Quoted in İsmail Hakkı Göksoy, “Atatürk ve Türk İnkılabının Endonezya'daki Etkileri,” Atatürk Araştırma Merkezi Dergisi 18, 52 (2002): 1-36.

[3] Ayten Serin, “İşte Bu Uğur Dündar Battaniyesi,” Hürriyet, 15 July 2007.

[4] Interview with Gökşin Duman, Istanbul, 13 August 2013.

[5] Interview with Galip Kayar, Istanbul, 16 August 2013.

[6] Trade data obtained from the Turkish Institute of Statistics (TUIK).