KL businesses urged to invest more in RI

The Jakarta Post, Jakarta

The government of Malaysia urged its businesspeople to take a closer look at Indonesia's business potential and continue to invest in the neighboring country, which has been off investors' "radar screens" for quite a while due to various problems.

Visiting Malaysian Deputy Prime Minister Datuk Seri Abdullah Ahmad Badawi said on Tuesday that there were many sectors in the country that could be invested in, especially now that Indonesia was moving ahead with its privatization plans.

"There are significant investment opportunities in Indonesia's banking, telecommunications and infrastructure sectors, in line with the government's commitment to privatization of its state- owned enterprises," he told a business forum here.

Badawi, who leads a delegation including two other ministers and some 72 business chiefs, is on the second day of his three- day official visit to the country.

In similar remarks, Malaysian Prime Minister Mahathir Mohamad said that Malaysia's businesspeople were open to buying assets managed by the Indonesian Bank Restructuring Agency (IBRA).

"... They are selling their assets to foreigners ..., so I think we are entitled to buy if we want to," Mahathir was quoted by AFP as saying.

"But I think that it must be prudent. You can't just go in and buy things that will not give any return."

The remarks may indicate that Malaysia is gradually taking over the role of Singapore as one of the leading investors in Indonesia.

Indeed, while other foreign investors, including those from Singapore, Japan and the U.S. are maintaining a wait-and-see approach as Indonesia has yet to completely resolve its political, legal and economic mess, Malaysian companies have already started buying assets here.

The most high-profile case was the purchase of huge plantation assets by Kumpulan Guthrie last year for US$368 million.

Financial group Commerce Assets-Holding Bhd., which owns Malaysia's third-largest banking group Bumiputera-Commerce, currently leads a consortium vying for the government's 51 percent stake in medium-sized Bank Niaga.

There are also three Malaysia-based firms that reportedly have expressed an interest in participating in the long-delayed Jakarta Outer Ring Road (JORR) tender.

Reports said that the three were BRD-Hicom Bhd., Road Builder Holdings Bhd. and Ranhill.

While foreign direct investment (FDI) flows into the country slowed down after the crisis started in the middle of 1997 (with the 2001 FDI figure plunging to $9 billion, from $15.42 billion in 2000), the flow of investment from Malaysia should be a relief.

The statements from Malaysia's two top officials also came only a day after IBRA unveiled its plans to sell a huge amount of bank loan assets worth more than Rp 150 trillion (around US$17 billion).

IBRA, which controls billions of dollars of assets variously taken over from closed banks and indebted bank owners, is also preparing to sell the government's stake in a number of banks.

In addition to the Bank Niaga sale, IBRA is also planning to sell government stake in Bank Danamon and Lippo Bank this year.

The agency is under pressure to collect cash to help plug the state budget deficit. This year alone, IBRA must raise more than Rp 35 trillion in cash to finance budget deficit estimated at 2.5 percent of gross domestic product or equal to around Rp 42 trillion.

The government is also planning to sell dozens of state-owned enterprises in a bid to raise some Rp 6.5 trillion in cash, also to help finance the budget deficit.

So far the government has only managed to sell its stake in state-owned telecommunications firm PT Indosat. The sale was not a success due to a lack of investor interest.

Meanwhile, State Minister of State Enterprises Laksamana Sukardi welcomed the initiative of the Malaysian government, and even hailed the delegation as the largest ever to have come from Malaysia.

Laksamana also reiterated that the fact that the two countries were neighbors should be perceived as an advantage compared with the situation for investors from other countries.

"... We're neighbors so they should understand more about our culture. Should there be cross-ownerships between the two countries, it would enable the two to compete with competitors outside ASEAN."

Indonesia and Malaysia are part of the 10-member Association of Southeast Asian Nations (ASEAN). Indonesia is the largest country in the grouping with over 200 population.