Goh proposes $740m fund for Indonesia

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)