Germany's chancellor visits Indonesia


JAKARTA, Indonesia (AP) - German Chancellor Gerhard Schroeder met with the Indonesian president Wednesday in talks aimed at bolstering relations and promoting trade with the world's largest Muslim nation. 

In the first visit of a German chancellor to Indonesia since the fall of ex-dictator Suharto, Schroeder and President Megawati Sukarnoputri were to sign agreements including one to promote and protect foreign investments in the country. 

The chancellor was expected to leave for Vietnam late Wednesday, the last country on his four-nation tour of Asia. 

The focus on investment comes at a time when Indonesia remains one of the most corrupt countries in Asia. Foreign investment approvals dropped 35 percent in 2002 due to a series of questionable legal and government rulings against Western companies. 

Among them has been the ongoing battle by foreign export credit agencies, including Germany's, to recoup some of the US$960 million in debt owed to them by Asia Pulp & Paper Co. 

The Indonesian Bank Restructuring Agency signed a deal with the company in December under which its four Indonesian units would repay only part of the debt over a year 10-year period. 

But foreign creditors complained it would force them to take millions of dollars in write-offs and demanded that the agreement be renegotiated. Talks have since stalled. 

The two countries enjoyed strong dies during the presidency of B.J. Habibie, who took over from Suharto in 1999. 

Habibie, who speaks fluent German, is now in Germany tending to his sick wife. 

Indonesia remains a major market for German ships.On Tuesday, Schroeder was in Singapore - a trip overshadowed by the fears of SARS.  

Singapore has been hit the hardest by the illness, with 28 deaths and 205 reported cases in the past nine weeks. 

Schroeder's delegation was reduced to 30 people from the originally planned 120 because of worries over SARS, which has killed more than 560 people and infected more than 7,400 others worldwide, mostly in Asia. 

German Embassy officials said the talks in Singapore focused on trade, the SARS problem, Iraq's future and the fight against terrorism. 

In a speech in Malaysia on Monday, Schroeder called for a speedy end to sanctions against Iraq, but forecast a lengthy U.N. debate over a U.S.-backed plan for administering the country. 

He strongly endorsed the United Nations as a "crucially important organization'' for resolving international conflicts and protecting international law. 

Schroeder and his delegation were to meet with officials in Vietnam on Thursday.  

The tour was slightly shortened to allow him to meet U.S. Secretary of State Colin Powell in Berlin on Friday. - AP 

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