Australian firms agree to invest A$550 million

JAKARTA (JP): A group of Australian firms agreed on Friday to invest A$550 million (some Rp 2.7 trillion or US$287 million) here for the expansion of their businesses this year, marking the first tranche of a A$1.3 billion five-year investment plan for Indonesia.

Indonesia and Australia signed a memorandum of understanding, covering eight agreements, that will help create some 20,000 new jobs in various sectors.

Witnessing the signing ceremony were Minister of Industry and Trade Luhut Pandjaitan and visiting Australian trade minister Mark Vaile.

"This (the signing) is a clear indication of the (close) relationships and the commitment of the Australian business community to Indonesia," Vaile told reporters at a press meeting.

The Australian minister is on a two day visit to Indonesia with a business delegation comprising 16 companies.

These 16 firms already have investments in Indonesia of about A$6 billion.

Their new investments include expansion plans worth A$130 million by Coca Cola Amatil, and a A$30 million investment by insurance firm Mutual Life & Citizens Indonesia.

Australia's largest bank, Commonwealth Bank, plans to open its third office in Indonesia with an investment of A$130 million.

PT Bank Commonwealth has so far spent A$30 million in this country with its second branch in Jakarta being opened on Thursday.

An Australian commercial explosives' distributor Orica Limited plans the construction of an ammonia nitrate facility in Bontang, East Kalimantan.

The construction of the facility will take two and half years and involve an investment of A$180 million.

Agribusiness company Austin Australia has secured two deals with Indonesian partners for the importing of cattle and the development of Internet projects.

Meanwhile, power producer Energy Equity Corp Ltd plans to expand its Sangkang, Sulawesi power plant's capacity by another 50 Megawatt (MW)s from the current 133 MW.

The company will invest A$15 million in the project.

"The A$550 million this morning is the first done package; there is a very strong commitment in the long term to investing in Indonesia," he asserted.

Australia's total investment, he said, would amount to A$1.3 billion and would help to create 13,000 additional jobs for Indonesians.

He promised further, bigger investment news when President Abdurrahman Wahid visits Australia sometime in April.

Asked as to what Indonesia must do to attract more investment, Vaile cited security and certainty as the key elements.

He said that other factors included a transparent financial structure, and clear and enforceable investment laws.

"And the ability for investors to work with all levels of government with confidence, be it the central government or the regional governments," he added.

He said that Indonesia should honor the general principles of investment if it wanted to retain existing foreign investors.

"Cash doesn't carry a national flag, it is very footloose across the world, and you are competing with many other markets," Vaile explained.

He said that the level of transparency and the structures that provide confidence for investors must be at least equal to those prevailing in the markets with which Indonesia was competing.

But, he admitted that many Australians took democracy for granted, as they demanded from Indonesia equal treatment like they were accustomed to receiving at home.

"We need to understand that democratization and managing that is not easy," Vaile stressed.

Minister Luhut said the government was working towards improving transparency but said the work could not be completed over night.

Indonesia is Australia's 10th largest market for merchandise exports and 12th largest source of imports.

Last year's bilateral trade between the two countries reached A$5.6 billion. (bkm)