Goh proposes $740m fund for Indonesia

JAKARTA (JP): Singapore Prime Minister Goh Chok Tong, who is leading a big investment mission here, proposed on Thursday two investment funds totaling US$740 million designed to kick-start investment by Singaporean companies in Indonesia.

Goh told a joint news conference after meeting President Abdurrahman Wahid that Singapore government-linked companies planned to invest up to $500 million in buying minority stakes in distressed assets held by the Indonesian Bank Restructuring Agency (IBRA).

A further $240 million (S$400 million) in loan facilities would be set up in conjunction with Singapore-based banks to finance investment by Singaporean firms in Indonesia, Goh added.

He said Singapore would also spend $1.2 million to promote Indonesia and Singapore as a joint tourist destination to take advantage of some seven million visitors visiting the island state annually.

"Our strategy is to try to funnel some of these visitors into Indonesia," he said.

Goh said Singapore wanted to act as a catalyst to woo foreign investors into Indonesia.

But he cautioned it wouldn't be politically wise for Singaporean companies to be seen to be controlling Indonesian assets.

"We won't take a majority share of IBRA companies," Goh said.

He said the fund could invest independently or in conjunction with others as part of an investment consortium to foster foreign purchases of IBRA-owned companies.

Goh, accompanied by a 15-member official delegation, including two ministers and a 60-member business team, is on a two-day state visit to Indonesia, his first since Abdurrahman's election in October.

Among the officials accompanying him are Foreign Minister S. Jayakumar and Minister of Trade and Industry George Yeo.

The business delegation includes representatives from Singaporean companies and international businesses based in Singapore interested in investing in manufacturing, trade, logistics, financial services and tourism.

Goh also called for increased Singaporean private investment in the islands of Batam and Bintan, in Riau province, and suggested the two islands be given special economic status.

Goh said foreign investors had been generally cautious about investing in Indonesia despite a much-improved political situation, but said the investment climate was becoming more secure.

But he reiterated that the most important factor in setting the Indonesian economy on the road to recovery was security.

"The most important factor in getting the Indonesian economy back on track is the security and political situation in Indonesia," Goh added.

Goh hoped Singapore's public show of confidence in its neighbor, and the facilities it was putting in place to stimulate investment, would be a catalyst to encourage investors around the world to do business in Indonesia.

Goh praised Abdurrahman's government as good a team as Indonesia could get and said it was too early to pass judgment on the President's handling of the country's problems after only about three months in office.

"We have to give the President much more time to resolve the ... uncertainty. I would think he has done as well as he could. The problems are complex, they are very severe."

Abdurrahman reassured investors, saying Indonesia was a safe place to invest, despite an explosion of religious violence in Maluku and growing separatist pressures in the provinces of Aceh and Irian Jaya.

"Security-wise and politics-wise we are safe," he said at the news conference.

Abdurrahman added that things would improve gradually in the provinces.

The President later told a gathering with mass media editors that Indonesia greatly appreciated the initiative taken by the Singapore government to woo back foreign investment to Indonesia.

"They are really serious and strongly committed to helping us and we should be grateful for that goodwill," Abdurrahman added.

The Singaporean delegation also met with Indonesia's Minister for the Economy, Finance and Industry, Kwik Kian Gie, Minister of Finance Bambang Sudibyo and Indonesian businesspeople to thrash out details of the proposed investment concept.

Goh also met with Vice President Megawati Soekarnoputri and People's Consultative Assembly Speaker Amien Rais later in the afternoon. (prb/vin)