Wed, 03 Mar 2010

From: Reuters

US President Barack Obama's trip to Indonesia should boost investment in Southeast Asia's biggest economy and curb negative perceptions on doing business in the nation, Indonesia's investment agency said today. Obama, who spent four years in Indonesia as a child, will make his first visit to the country as president on March 20-22. Gita Wirjawan, head of the investment coordinating board, said Obama's visit to the world's fourth most-populous nation would get Indonesia on the radar screens of more investors.

"There's not enough people in (Washington) DC who know about Indonesia, who are familiar with Indonesia," Wirjawan, a former investment banker with JP Morgan and Goldman Sachs, told foreign correspondents. "This, I think, will elevate Indonesia to a new awareness level, which I think we have got to take advantage of," he added, noting Indonesia was too often known for natural disasters and terrorist attacks rather than as a potential investment hot spot.

Wirjawan, who was appointed last year by President Susilo Bambang Yudhoyono with a mandate to boost investment, said the Obama trip would help companies look seriously at Indonesia.

Indonesia has faced stiff competition from regional rivals such as Vietnam and China attracting foreign direct investment, and investors often complain about obstacles such as tortuous red tape, widespread corruption and a shaky legal system.

Six percent growth
Wirjawan said he did not want to gloss over problems facing investors, but there were opportunities because even "if all of us (in government) went to sleep for the next five years there is a good chance our country would still grow at 6 percent".

Indonesia's economy grew 4.5% last year, faring much better than most neighbours, helped by its large domestic market and relatively lower proportion of exports. The government expects the economy to grow 5.5% this year, before picking up speed going into the decade. Indonesia was one of the star emerging markets last year with stocks up 90 percent, government bonds up 20%, and the rupiah, Asia's best-performing currency, up 17% against the dollar last year. Agreements on education, security, and trade and investment would be signed during Obama's visit, including one related to the Overseas Private Investor Corporation (OPIC), Wirjawan said.

The US government agency provides insurance for companies investing in developing countries. "Some, if not many, companies in the US, have taken a view not to invest in Indonesia unless there is coverage for political risk," said Wirjawan. Indonesia hosts a number of major US companies, including global resource firms such as Chevron and Freeport McMoRan Copper & Gold Inc, although much of the investment dates back decades.

Indonesia's realised foreign investment last year was about $13 billion to $14 billion, but the nation should be able to achieve a "sweet spot" of up to triple that at $25 billion to $35 billion, Wirjawan said. - Reuters