Tue, 29 Mar 2011


It is reported that Indonesia could see upwards of USD 10 billion in investment from an unexpected source as French companies expressed interest in participating in infrastructure and energy projects. French investment only played a minor role in the country in recent years.

According to data from the Investment Coordinating Board, its investment in Indonesia only amounted to about USD 307 million from 2006 to 2009.

Mr Hatta Rajasa, the coordinating minister for the economy, met with Ms Christine Lagarde minister for economic affairs, finance and industry for France and a delegation of 40 French business leaders. It is the first visit made by France at a ministerial level in 14 years.

He said French businessmen planned to invest USD 175 million in a project called the Bandung Metropolitan Railway, a network of railways connecting Cicalengka and Padalarang in the West Java city.

Mr Hatta also said that French companies would participate in a USD 5 billion nickel smelter project in Halmahera in North Maluku. He added that "They are also interested in geothermal and environmentally friendly industries."

In a separate announcement, finance minister Mr Agus Martowardojo said Eramet, a French firm, would work with Japanese firm Mitsubishi and state owned miner Aneka Tambang on the Halmahera project. He added that "There are two investment agreements that have materialized with the French in a short amount of time."

Ms Lagarde confirmed the intention of French companies to boost their investment in Indonesia, although she declined to provide details.

She said that the French chief executives and chairmen who met with Mr Hatta came from sectors such as energy, transportation, water treatment, weather forecasting, railroad development, construction and retail. She added that "Those companies are determined to improve investment."

Ms Lagarde said that apart from boosting investment, the French want to double the growth rate of trade between the two countries. She said the growth rate of trading, which is currently at 5%, is too small.

France is the 23rd largest importer of Indonesian commodities. The main exports to France include electrical transformers, static converters, furniture, cocoa butter, fat and oil. Indonesia is the 13th largest importer of French commodities, mainly bulldozers, excavators and other heavy machinery.

Indonesia registered a deficit of USD 762.9 million in trade with France in 2010. The deficit was spurred by declining exports of commodities and items such as natural rubber, paper pulp, footwear and radio and telephone parts.