June 17, 2010 (Gulf Intelligence): Indonesia, which is forecast to achieve 6 percent economic growth this year, offers Middle East investors access to the biggest Islamic market and possibly greater returns than are currently available in the Gulf region, the chairman of the south-east Asian country's Young Entrepreneur's Association said. With a population of more than 230 million, which is much greater than the total population of the Gulf including Iraq and Iran, Indonesia boasts the largest Islamic market. Its exports account for a quarter of gross domestic product and rose 20 percent in the first quarter from a year earlier.
There are so many needs and opportunities to be met in Indonesia as economic development proceeds, but there's only so much that can be financed through the state budget,'' Erwin Aksa, who heads-up the Bosowa Corp., the largest company in eastern Indonesia, said at a press briefing in Dubai today. "With China rising and the rest of the world declining, we welcome Middle Eastern investors more than as partners, but as brothers.''
Indonesia's economy grew at the fastest pace in more than a year last quarter as record-low interest rates boosted consumer spending and exports and investment recovered. Gross domestic product in Southeast Asia's largest economy increased 5.7 percent in the three months to March 31 from a year earlier. Bosowa's Aksa is visiting the Gulf to promote Indonesia and to entice Arab investors for his holding company's various business lines, including cement, automotive, property, resources, and infrastructure and is planning to expand its business to mining, plantation and forestry.
While we have already secured a sizeable presence in most of these sectors, Bosowa is seeking partnership with experienced Middle Eastern companies in order to obtain the critical economies-of-scale faster so it can enlarge and bolster its dominant position,'' said Aksa. Jordan's CTI GroupCTI GroupLoading... Inc., a cement and clinker trading company that owns and operates a fleet of cement carriers and cement shore terminals worldwide, was the first Arab investor to acquire a stake in one of Bosowa's units when in March it bought a stake in Indonesia's largest independent clinker grinding unit in Batam.
Indonesia President Susilo Bambang Yudhoyono is expected this month to sign a decree easing restrictions on foreign investment. The order will change the country's so-called negative investment list, which limits foreign ownership in companies. Health care and education are among the 40 sectors in which increased foreign investment will be permitted.
About Bosowa Corporation Bosowa was founded in 1973 by Mr. Aksa Mahmud, one of the leading entrepreneurs from Eastern Indonesia. Bosowa Corporation was setup as the holding company of the Bosowa Group and is currently headed by Mr. Erwin Aksa, President Director, who is also the eldest son of the founder. Bosowa is involved in various lines of business, including cement, automotive, property, resources, and infrastructure and is planning to expand its business to mining, plantation and forestry.
Q&A WITH PAK ERWIN AKSA
Questions: 1/ How is Bosowa Corp. positioned in Indonesia?
Bosowa Corporation is known as the largest business group in the eastern part of Indonesia and one of the fastest growing companies in the country. This fact matters a lot to many Indonesians as it is widely perceived that development during the 32-year reign of the Suharto regime until it ended in 1998 was unequal between the eastern and western parts of the country.
We envision a standard of living for the eastern-Indonesian people comparable not only with the western side of the country but also on a par with other emerging Asian economies, and while so much has been done to date, much more still needs to be pursued which offers many opportunities.''
2/ Why is Bosowa reaching out to potential foreign investors and partners?
Given the historic lack of government investment in Eastern Indonesia, Bosowa has actively participated in the economic development of almost every sector from the cement industry to mining, property, infrastructure, trade, automotive, financial services, and most recently energy. While we have already secured a sizeable presence in most of these sectors, Bosowa is seeking partnership with experienced Middle Eastern companies in order to obtain the critical economies-of-scale faster so it can enlarge and bolster its dominant position. At the moment, when China is rising and the rest of the world is declining, Indonesians welcome Middle Eastern investors more than as partners, but as Muslim brothers and friends.''
3/ Why does Indonesia need foreign investors?
There are so many needs to be met in Indonesia as economic development proceeds, but there's only so much that can be financed through the state budget. Hence, we should allow foreign investors to pick up the slack and to get a significant return on their investment in a relatively short period of time.
Therefore foreign investors, especially from the Middle East are not only invited to be joining this massive developmental wave of Indonesia, not also to participate from a far, but to be involved thoroughly.''
4/ What sectors offer the best opportunities for investors looking at Indonesia?
All things to do with infrastructure - roads, ports, bridges, and public utilities such as clean water, telecommunications and even waste treatment and management remain poorly underdeveloped. The country is also lagging behind in the crucial service and consumer industries which are booming as a result of the explosive growth of the middle class.
The industrial sectors, which account for 80 percent of the country's GDP, such as oil and gas, mining and energy, agriculture, infrastructure, banking and finance, are not running at full capacity due to insufficient development and technology as well as poor infrastructure.''
5/ What opportunities are Bosowa pitching to investors on this Dubai visit?
For Bosowa, the four major sectors where we seek investors and where there are real opportunities in Indonesia for high growth and expansion includes consumer financing, energy, infrastructure and petrochemicals. Consumer financing opportunities derive from the booming middle class in Indonesia, whereas investment in the energy industry, including in alternative energy, is based on declining domestic supply and global supply constraints.
The development of the country's infrastructure and the expansion of our manufacturing capacity are definitely on the top agenda of the Indonesian government, and these are areas in which Bosowa are already strongly positioned. Opportunities for investment and growth in the petrochemical industry are also a natural derivation of a growing middle class and large scale industrialization, and it is also a sector in which global demand outstrips supply.