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Saudi King Kicks off Investment Bonanza With State Visit

He brought a possible multimillion dollar investment and 459 tonnes of luggage.

Saudi Arabia's King Salman's visit to Indonesia has sparked plenty of speculation. It was reported that the 81 year-old king, who was crowned on January 2015, has an agenda in Indonesia, namely at least $25 million worth of direct investment.

Middle East expert, Faisal Assegaf of Al-Balad, a news website that focuses on the Middle East, says the Saudi King's first visit in 40 years is fueled by political, economical and religious motives. Assegaf claimed that Saudi Arabia is trying to exert political influence in other muslim countries, especially Indonesia.

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"Indonesia is prestigious because it's the biggest Muslim country in the world," said Assegaf. "Looking at the politics of Middle East, the Saudis are competing with Iran in terms of power."

"Saudi Arabia is trying to make a move here because Iran has already established a close relationship with Indonesia. This is shown by Indonesia's President Joko Widodo's visit last year to Iran to initiate an oil trade relationship between Pertamina and National Iranian Oil Company (NIOC)," said Assegaf to VICE Indonesia.

According to Assegaf, to exert political influence, usually the first step requires investment. Saudi Arabia's economy has been in the red since 2014, after a massive drop in oil prices from $90 a barrel to $40 a barrel, and it's been hard to see where the investment would come from.

"The glorification of Saudi's King visit has become too much. Many even speculated there's a connection to [mining giant] Freeport. This has put Indonesia in an inferior position even though we're the one in control here," said Assegaf.

Assegaf claims that the Saudi's $25 million investment still needs further examination since according to the International Monetary Fund, Saudi Arabia will be experiencing in a deficit until at least 2020. The IMF also notes that Saudi Arabia had a $100 billion deficit in 2015 and $84 billion in 2016.

"Saudi Arabia is about to impose privatization in some sectors of it's economy for the first time. Before that, all companies were owned by the state and foreign investments were strictly limited," said Assegaf. Aside from privatization, Saudi Arabia will help money through higher taxes like a 5 percent value-added tax (VAT) on non-alcoholic beverages and cigarettes and higher gas prices in the kingdom.

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The Chief of the Indonesia Investment Coordinating Board (BKPM), Thomas Lembong, said it won't be easy for Saudi Arabia to invest in Indonesia since they're used to working with developed countries.

"Negotiation between Pertamina with Aramco regarding oil refineries in Balongan and Dumai is still ongoing. I'm afraid we can't disclose the details of the negotiation," Lembong told Okezone Finance.

King Salman is scheduled to stay in Indonesia from March 1-9. Accompanying him is his delegation of 1,500 people, including 25 princes and 10 ministers. Aside from discussing political and economical affairs, King Salman is scheduled to meet with Indonesia's three biggest Islamic organizations: Nahdlatul Ulama (NU), Muhammadiyah and Majelis Ulama Indonesia (MUI).

The Saudi contingent arrived at Halim Perdanakusuma Airport in Jakarta by way of seven Boeing and Hercules aircrafts. After greeted by Indonesia's President Joko Widodo and Jakarta's Governor Basuki Tjahaja Purnama. After he promptly went to the Presidential Palace in Bogor and will spend the night at Raffles Hotel. Around 5,000 body guards will be deployed to ensure the safety of the trip.

King Salman is scheduled for a vacation in Bali from 4-9 March at the Saint Regis Hotel. As many as 360 luxury cars and dozens of buses will be utilized to take them around Indonesia's tourist hotspot. For safety reasons, 5,000 bodyguards and 30,000 traditional police in Bali will be deployed.