The chief of the Overseas Private Investment Corporation has urged US companies to cast their gaze outside of Java Island to tap the growing potential of Indonesia’s outlying regions.
“Be patient, be persistent and aim for long-term partnerships,” OPIC president and chief executive Elizabeth Littlefield said at the close of a two-day conference in Jakarta on Thursday.
She said OPIC, a US government agency that mobilizes private-sector investment in emerging nations, had heard “a lot of interest in the infrastructure sector, as well as renewable energy and technology such as telecommunications and software.”
Although Littlefield declined to mention any specific deals made at the forum, she said Indonesia needed $150 billion to upgrade its rickety infrastructure, which in turn created opportunities for US companies. She also estimated that 80 percent of infrastructure projects worldwide in the near future would take place in emerging markets.
To help bring in that investment, Littlefield continued, investors need help from Indonesia. She pointed to the need for foreign businesses to be able to set up easily and secure licenses and be able rely on an honest judicial system that ensured honest competition. Clear labor regulations were also a necessity.
The Doing Business 2011 report, released by the International Finance Corporation this year, ranked Indonesia 121st out of 183 countries in terms of ease of doing business. It fell six places from 2010, with the report citing unsatisfactory progress in the ease of starting a business and securing licenses.
Scott Younger, the president of both Glendale Partners and Nusantara Infrastructure, said the nation’s economy could grow between 9 percent and 10 percent each year if it improved its infrastructure. He pointed to land acquisition as one of the country’s biggest challenges in upgrading its roads, airports and seaports.
He said Indonesia needed about $30 billion in infrastructure investment per year, which the government would struggle to fund it by itself. “If they want people to invest here, they have to fix the infrastructure first.”
Telecommunications was also a popular topic at the conference, especially given the high rate of mobile phone use in the country.
“There are two industries that will last for decades in Indonesia, telecommunications and financial services,” said Uday Mathkar, Oracle’s managing director for Indonesia, during a session titled “Where the Opportunities Lie: Information Communication Technology.”
The panel, which included companies such as IT giant Oracle, AT&T, Cisco Systems and Qualcomm, agreed that Vietnam, Indonesia and the Philippines had huge potential but had not received enough support compared to Singapore, Malaysia and Thailand.