A global leader in power and automation technologies, ABB (Asea Brown Boveri) is keen to deepen its footprint in Indonesia amid signs, it claims, of significant improvements in the country's economy and investment climate.
To support the execution of its global strategy, eight regions have been created to manage business and functional roles effectively across the world, as well as maximize synergies and ensure a more efficient use of resources.
As part of this regional approach, ABB's India chief executive, Ravi Uppal, who is also responsible for the South Asia-Pacific region, visited Indonesia last week and spoke with The Jakarta Post to share some of his insights, as well as the company's plans for Indonesia. The following are excerpts from the discussion: What insights have you gained upon visiting Indonesia? I'm very encouraged to see the way the energy sector in Indonesia is growing now.
Indonesia has a total electricity capacity of about 26,000 megawatts right now and the country plans on adding another 25,000 megawatts over the next 10 to 20 years. So, this means that it wants to double its capacity. Because Indonesia can see that there will be greater construction activity, more industries will grow and living standards of the people should go up.
In the past, the nation was doing this on its own, but now the time has come for the effort to be shared with the private sector. This is why they are inviting entrepreneurs from Indonesia and from outside to come here and set up the power generation infrastructure, which is based on coal and gas.
The government is going to invest a huge amount of money, of which about 40 percent will be spent on power generation and 60 percent on transmission and distribution.
With this kind of investment coming in, it brings a lot of promise to a company like ABB because this is our strength. ABB has been in this country for more than 40 years. We have a long history in this country and we would like to take it forward.
ABB's total assets stored in this country are worth over US$1 billion. So you can understand that we have historically had a very substantial presence and would like to take it forward now.
We have nearly 450 people working for ABB in Indonesia. We are doing business at the moment worth about US$150 million in total.
What are your current and future projects with the state-owned electricity company PLN? There is going to be demand for a transmission and distribution network from PLN. There will also be some power plants that will be set up by PLN and in this process we will have a role in providing products and solutions.
There are some contracts and inquiries in the pipeline. So during the course of the year we believe there will be more prospects that can be used in our favor. We look forward to that.
Apart from those with PLN, are there any other projects you are aiming to set up? Indonesia is set to invest a lot of money not only in oil and gas power plants. We have a valuable offer to make in the oil and gas sectors. There are many oil fields being developed by private companies, which we are also connected with and have made valuable offers to.
Other sectors that we have a dominating presence in are the pulp and paper industries. As you know, Indonesia is a large producer and exporter of pulp and paper.
For the manufacturing of pulp and paper we supply complete electrical systems, complete automation systems and quality control systems. So, all the major companies you know of in this industry have ABB products, which we are very proud of.
As you may know, Indonesia's cement industry is growing because of growth in construction. Because of this, we also play a large role in supplying the complete electrical systems and automation systems to cement companies.
ABB is a market and technology leader in both the power and automation industries here. We are very proud that we have brought many new technologies to Indonesia and are intent on also bringing new technologies for use in the oil and gas sectors in the future.
What is your strategy for making the most of the opportunities at hand? First, we would like to crease a strong local footprint. We would like to augment this by taking more people on board, training them intensively, building their competence and also increasing our local manufacturing presence.
We may invest on our own or in the form of a joint venture to manufacture more products locally this year.
We are talking about the future here. New productions should include electrical products, ranging from switch gears and transformers to low-voltage distribution products. There are several types of other products, but basically electrical equipment.
We are starting that this year. This year we will finalize our plans and start executing them.
What is the role of the ABB Indonesia the Asia Pacific region? Indonesia is an integral part in the South Asia-Pacific region for ABB. We are using it as a regional center for these synergies, which have been prepared in different countries. For example, when it comes to increasing competency, we have a regional team for that.
For market development, we use resources within the region by implementing customer education and exposing the market to new technologies.
When building internal systems we use a common regional force to bring a common system to all the countries involved. So I think there are many instances in which we share our resources, rather than letting every country use only its own. We now have a regional force to help bring every country to the same level.
This is a model of synergy that we are ready to use.
What are the challenges for ABB's operations in Indonesia? Challenges always lie in building up the local talent pool. We should be able to train them very fast, building competency to execute our new projects with speed.
Every country has a bureaucracy. Indonesia to my knowledge is no exception. Some places are more bureaucratic, others less. I think in every country you go through different moods. There is a mood where nobody wants to invest, instead preferring to watch, just as there is the mood in which everybody wants to invest.
I think Indonesia is gradually moving to a stage where people want to invest. They want to invest now. They think the economy is looking good, Indonesia's rupiah is growing stronger, inflation is coming down and everything is moving in the right direction.
I'm not too concerned about the bureaucracy. I'm very assured that Indonesia is going to be one of our highest growth regions as we go forward. I think that things are going to change for the better in Indonesia.
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