Corruption remains main concern for Finnish investors
Trade and investment ties between Indonesia and Finland have grown rapidly over recent years after a period of stagnation following the Asian financial crisis in 1998. Although two-way trade between the countries remains relatively small, both governments have agreed to boost trade and investment activities in the near future. To learn more about the two nations' economic ties, The Jakarta Post's Rendi A. Witular interviewed visiting Finnish Minister of Foreign Trade and Development Mari Johanna Kiviniemi. The following is an excerpt of that interview:
Question: How confident are you in the economic reforms in Indonesia?
Answer: After meeting several Indonesian ministers, we believe that the government is determined to make changes and improve the business environment. The government is getting more trust from the international business community and we hope that they will succeed in implementing their economic policies.
However, corruption is still a big problem here. We haven't had any chance to go into details with the Indonesian ministers over this issue, but I think it is one of the biggest obstacles for Finnish companies to invest here.
In that sense, the Indonesian government still has a lot of work to do. It is not enough to just have policies. The government should also have the determination to implement them in practice.
The stability of economic growth, inflation levels and political conditions are also among the considerations by Finnish businesspeople before they decide to invest here.
What about security concerns? Especially after the recent terrorist attack in Bali? It is very regrettable what happened in Bali again. It will have an impact to the tourist sector on the island and in Indonesia overall.
But the Indonesian government has done a good job in cracking down on terrorist groups. Therefore, I don't think the security situation will get any worse. Terrorist attacks also happen in other parts of the world.
I also don't think that the attack will disturb the economic growth in this country.
How are the trade relations between Finland and Indonesia? Trade has been growing since 2003. We had quite a lot of trade activities already in the 1990s, but because of the Asian crisis the intensity declined.
In 2004, Finnish exports and imports to Indonesia were valued at 127 million euro (US$150 million) and 118 million euro, respectively, and have been growing very rapidly this year.
There is a great potential in Indonesia following its recent higher economic growth. The country has a big market.
The government's policy for the economic sector -- not only in trade but also in investment -- is getting more progressive, and the business climate here is more conducive. In the future, Finnish companies will not only seek trade opportunities but also investment.
On the investment side, we are very interested at the moment in the pulp and paper industry, while in the trade sector we are offering various products, particularly machinery for the forestry industry, telecommunications and electricity generators.
Finnish imports from Indonesia mostly consists of crude materials and minerals, transportation equipment, food and beverages.
There has been growth in the trade between the two countries since 2003. For the first six months of this year, Finnish exports and imports from Indonesia reached 127 million euro and 118 million euro, respectively.
I expect two-way trade will grow by an average of 40 percent this year and probably next year.
Last December, Indonesia imposed antidumping duties on uncoated printing and writing paper being exported here by a number of Finnish companies. How do you see this policy? We brought up this issue during a talk with the Indonesian minister of trade, and I pointed out that this was not the way to improve trade and investment ties between the two countries.
The minister, however, was not able to answer all of the detailed questions, but I think she heard our message.
Indonesia is known to be one of the world's largest forestry- based exporters, with several of its products also sold in the Finnish market. There are concerns here that some of the products that have entered your country come from illegally felled timber. Are there any efforts to ban these products from your market? We have also discussed this issue with the Indonesian minister of trade. From the Finnish side, we are taking efforts to ensure that no illegal forestry products enter the country. However, there are no restrictions that have been issued to specifically prevent the entry of illegal products from Indonesia. It depends on the customers. Customers in Finland have a high degree of care for environment sustainability.