Investing in Indonesia with a Racing Spirit!

Investing in Indonesia with a Racing Spirit!

Swedish-Indonesian relations date far back in time - before
independence - and have been broad and deep, in spite of the
large distance between the 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
carried by the private sector and many of Sweden's large
multinational companies are active in Indonesia. This trade and
investment relation is not one between elites or Government
representatives. This is a relation 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 relation. In an increasingly globalized world, these
relations are also becoming more and more multi-faceted. 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. Other Swedish IT companies in
Indonesia include IFS, a business applications supplier and
Atlantis Software. Tetra Pak milk- and fruit juice containers are
used all over Indonesia. Indonesian women 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 Atlas Copco mentioned. In
the forestry-related sector we find the trading house Elof
Hansson. 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 in 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 to share this
knowledge with possible new investors and traders in Sweden.

As an example the new Swedish Ambassador to Indonesia, Lennart
Linner, who arrived as late as last November, recently visited PT
SKF Indonesia, the producer of ball bearings, discussing the
experiences of being an investor in Indonesia with Mr 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!" Mr Saarisivu smiles. "We have 40,000
employees in 95 production units, 70 sales units and (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 bearing made in
the factory in Jakarta are the Indonesian motorcycles
manufacturers (Honda, Yamaha, Suzuki) and several vehicles
manufactures. Unknowingly for many, millions and millions of
Indonesian use SKF ball bearings every day they ride motorcycles
and cars!

"Tell me something about being an investor in Indonesia", the
Ambassador asks. Mr 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 leaders 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 work-force, and a very good working relation
between the union and the management." Mr Saarisivu adds that
also neighbor relations are important to his company, and many
who live close to the factory use the mosque on the company
grounds for Friday prayers.

"We have a racing spirit in the company" Mr 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 board-room. And we have a living relation
with motorcycle racing. The SKF Enduro Adi Jaya Racing Team won
Yamaha Cup 2001 with Ahmad Jayadi as rider. SKF Fuchs Honda
Racing Team won the Indonesian championships in 2001 with rider
Ahmad Jayadi. The same team won again in 2002. All these tittles
have been won in the most prestigious class 116cc 2-stroke tune-
up. 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 affaires and a strong role for the United Nations.

Indonesia is indeed of great importance, being the fourth most
populous country in the world and having the largest Muslim
population of any country. It's economy is the largest amongst
the ASEAN countries and its natural resources are indeed vast.
Regionally Indonesia is likely to play an increasingly prominent
role in the development of an integrated ASEAN market by 2010 and
the broader and more ambitious ASEAN Community by 2020. Already
Indonesia is playing a leading role in promoting further co-
operation on security amongst ASEAN's members. With its strategic
location in Southeast Asia (through its waters pass about half of
all the worlds shipping), prosperity and stability in Indonesia
will affect the region as a whole. Likewise developments further
ashore in Asia and globally, be they economic, political or
security-related, will inevitably have an impact on Indonesia.

Having gone through profound political and economic change during
the last six years, and with confidence that the forthcoming
presidential elections will be carried out in the same peaceful
way as the general elections in April, there is now renewed hope
for further economic growth in Indonesia in the years ahead.
Sweden for its part, looks forward to expanding its relations
with Indonesia sharing the many experiences and challenges we
have in common.