BLOOMBERG/Red Tape Removal Aims to Lure Chinese Investment to Indonesia
By Yoga Rusmana & Liza Lin
The nation’s efforts to streamline permit processes may entice China to help the government double foreign participation in infrastructure projects by 2014, said Gita Wirjawan, head of the Investment Coordinating Board.
“I have reasons to be optimistic with what we’re doing,” Gita said. “Now you don’t have to go to 15 ministries for a sign-off to get your permit, you can just come to my office.”
Foreign direct investment into Southeast Asia’s biggest economy may increase to between $30 billion and $35 billion over the next four years, compared with $14 billion last year, Gita said in Jakarta. Investment is targeted to grow by 15 percent in 2010, he added.
“I’ve been in discussions with local partners and their Chinese conglomerates for toll-road concessions and also for power-generation concessions in Sumatra, Java and Kalimantan,” Gita said.
“I think a lot of Chinese companies are very much interested in infrastructure, on top of the fact they have been and continue to be interested in natural resources in Indonesia.”
The country aims to more than double spending on bridges, roads, seaports and airports to support President Susilo Bambang Yudhoyono’s economic-growth target of 6.6 percent average per year over the remainder of his second term, which ends in July 2014.
Of the targeted $150 billion to $160 billion, the government would spend $50 billion to $60 billion and the rest would come from private capital, Gita said.
Japan, South Korea, the Middle East, European countries, the United States and the members of the Association of Southeast Asian Nations are also seeking opportunities to invest in Indonesia, he said.
The country expects to see more public-private partnership investments with Chinese companies, Trade Minister Mari Elka Pangestu said last week.
“We’re open for business and if you don’t come now, you’re going to miss the boat, because Indonesia is a growing market,” Mari said. “We’re growing rapidly and we’re talking about a large market.”
China and Indonesia agreed on several projects during a visit by Chinese Commerce Minister Chen Deming to Yogyakarta on April 3.
“Investment in Indonesia should not just be about natural resources; it should involve the creation of infrastructure whether soft or hard,” Gita said.
“We have a lot of islands but don’t have as many roads,” he said. “The government has taken a view in the next five years to build 20,000 kilometers of roads, which I think will significantly connect people in different parts of the country.”
The government is also committed to elevate electrification by adding 1,000 megawatts of power-generating capacity through a partnership between PT Perusahaan Listrik Negara and local and foreign investors, Gita added.
“For all the deals, I think we’re looking at about $4 billion to $5 billion with the Chinese companies in terms of roads, power generation, and energy,” Gita said.
In the mining sector, PT Aneka Tambang, Indonesia’s second-biggest metal company by market value, plans to team up with a Chinese partner to build a $1.2 billion alumina smelter, Gita said, declining to identify the Chinese company.
The infrastructure and Aneka’s smelter deals will be signed when Chinese Prime Minister Wen Jiabao visits Jakarta, he said. Wen postponed a planned visit to Indonesia last week after the earthquake in his nation.
China’s investment in Indonesia has totaled $265.5 million in the past four years, mainly in infrastructure, according to a Trade Ministry statement posted on its Web site on April 1, which cited data from the investment board. Two-way trade more than doubled to $25.5 billion in 2009 from $12.5 billion in 2005.