COUNTRY PROFILE -- Sweden

COUNTRY PROFILE -- Sweden

Article for The Jakarta Post 6 June 2004

Investing in Indonesia with a racing spirit!

Swedish-Indonesian relations date back far in time -- before Indonesian independence -- and have been broad and deep, in spite of the large distance between our two countries.

Diplomatic relations were established in 1950, Sweden being one of the first countries to recognize the newly independent Republic of Indonesia in late 1949.

The backbone of Sweden's relations with Indonesia, however, is the private sector, with many of Sweden's large multinational companies active in Indonesia. This trade and investment relationship is not one between elites or government representatives. This is a relationship that is carried by Indonesian workers in factories in Indonesia, and by Swedish and Indonesian consumers. Trade and investment is an international people-to-people relationship.

In an increasingly globalize world, these relationships are also becoming more and more multifaceted. A Swedish product could be produced in an ASEAN country or somewhere in Europe outside of Sweden. A Swedish company could be owned by others than Swedes, but have its headquarters in Sweden -- or the other way around.

Some Swedish company brand names are quite familiar to Indonesians, others perhaps less so. Everyone recognizes a Sony Ericsson cellular phone, but how many know that the telephone system that they are talking through builds on Ericsson equipment? Today, Ericsson has the edge in the technology shift from analog to digital mobile telephony, leading the way to third-generation mobile communications.

Tetra Pak milk and fruit juice containers are used all over Indonesia. Indonesian women (and also an increasing number of men) will no doubt associate quality cosmetics with Oriflame, sold all over Indonesia.

The yellow Swedish Match matchboxes are recognized by millions of Indonesians, as are Lux and Electrolux home appliances. Hundreds of thousands of Swedes have Indonesian products from the furniture chain IKEA in their homes or wear Hennes & Mauritz Indonesian-made clothes. Anyone in mining will think of reliability and high-tech when hearing the name Atlas Copco mentioned. Swedish consumers are enjoying excellent Indonesian pineapple and Indonesian drivers feel safe in Volvo and Scania cars, trucks and buses.

Encouraging trade and investment in both directions is a centerpiece of the activities of the Swedish Embassy in Indonesia. The ambassador and his staff often visit Swedish- related companies in Indonesia to learn more about the practicalities of doing business here, and then share this knowledge with possible new investors and traders in Sweden.

As an example, the new Swedish ambassador to Indonesia, Lennart Linnir, who arrived last November, recently visited PT SKF Indonesia, the producer of ball bearings, discussing the experiences of being an investor in Indonesia with Ilpo Saarisivu, the managing director of the company here. The ambassador also saw the production line and talked to staff at the company.

SKF was established in Sweden in 1907 -- "three years to go to the company's centennial!" Saarisivu says with a smile. "We have 40,000 employees in 95 production units, 70 sales units and a (commercial) presence in practically all countries of the world."

SKF has been present in Indonesia since colonial times and started production under its own management and ownership (PT SKF Indonesia) in 1997. Today, there are 400 employees, nearly all of them Indonesian. The buyers of the quality ball bearings made in the factory in Jakarta are Indonesian motorcycle manufacturers (Honda, Yamaha, Suzuki) and vehicle manufactures. Unknown to many, millions and millions of Indonesians use SKF ball bearings every day they ride on motorcycles or in cars!

"Tell me something about being an investor in Indonesia," the Ambassador says.

Saarisivu answers with yet another broad smile. "Indonesia has been a very encouraging experience for us. Through all the difficulties in this country during the past few years we have been able to grow, and we are by far the leader in delivering ball bearings to the automotive industry here."

Some people have said that it is difficult to find competent staff in Indonesia, but that is not the SKF experience. "We have a loyal and very competent workforce and a very good working relationship between the union and the management," Saarisivu says, adding that good relations with nearby residents are also important to the company, and many residents who live close to the factory use the mosque on the company's grounds for Friday prayers.

"We have a racing spirit in the company," Saarisivu says. "We see it as a goal to be better and better all the time, so a race for quality is crucial and we all participate in it, from the production floor to the boardroom. And we have a living relation with motorcycle racing."

The SKF Enduro Adi Jaya Racing Team won the Yamaha Cup 2001 with Ahmad Jayadi as the rider. The SKF Fuchs Honda Racing Team was Indonesian champions in 2001 with rider Ahmad Jayadi. The same team won again in 2002. All these titles have been won in the prestigious 116cc 2-stroke tune-up class. The 2003 racing season ended with a win in the National Championships, this time with a Honda bike and rider Poppy Rafid.

Although business relations might dominate, the relations between Sweden and Indonesia cover everything from research and sports to culture and tourism. Before the devastating terrorist attacks in Bali in October 2002, nearly 20,000 Swedish tourists visited Indonesia every year. Since then that figure has dropped but is again on the rise. Nowadays there is also a lively cultural exchange in such areas as art, film, music, food and design, and not least important -- a growing student exchange.

Equally crucial, Sweden and Indonesia share views on many important international issues, including the need for a multilateral approach to many of today's most intractable problems in international affairs and a strong role for the United Nations.

To Sweden, Indonesia is indeed of great importance, having the world's fourth largest population and the largest Muslim population of any country. It is also of importance because Indonesia, with its strategic location, is a major political actor, not only in Southeast Asia but in Asia as a whole.

Sweden firmly believes that there is great potential to expand the bilateral relations between the two countries in many different fields, and Sweden is certainly prepared to do its part in realizing this vision.