KL urges businesses to continue investing in RI

KL urges businesses to continue investing 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.