Wed, 23 Aug 2000

RI's bad image affects German investment

JAKARTA (JP): The German-Indonesian Chamber of Commerce and Industry (EKONID) said on Tuesday that German investors were reluctant to enter Indonesia because of the country's bad image.

EKONID president Fritz Kleinsteuber said that Indonesia was suffering from a negative image stemming from constant reports of social unrest in various regions of the country.

"We have to work to improve Indonesia's image first," he told reporters following an EKONID business lunch that introduced German's new ambassador, Gerhard Fulda.

Kleinsteuber blamed negative news reports on Indonesia for having distorted Indonesia's image in the international community.

According to him, good news about Indonesia was never really exposed abroad. "Business here is doing well, but nobody talks about it.

"Bring some good news and investors will come, but as long as we have so much bad news, there will be no investment," he said.

He said that at present, no German investor was ready to invest in large projects in Indonesia, but added that there would always be small and midsize export-oriented projects.

"Ten small projects are much better than one big project because they create more jobs," he said.

The German business community, he said, was also awaiting the formation of the new Cabinet before committing to any new investments.

He said that over 60 percent of Indonesian exports to Germany were manufactured products, while the remaining were natural commodities.

Manufactured products exported to Germany range from electronic products to bicycles parts.

"It's a very broad base, about 100 different products," he said.

Kleinsteuber said that small and midsize companies that had survived the crisis were able to benefit from their business with their German partners.

He expressed optimism that Indonesian exports to Germany would grow.

"Indonesian exports to Germany are going up -- constantly," he said.

But data from EKONID show that Indonesian exports shrank from US$1.5 billion in 1997 to $1.4 billion in 1998 and down to an estimated $1.3 billion in 1999.

Nevertheless, Indonesia enjoys a trade surplus with Germany since 1998 when it booked DM 618 million (about US$294 million) in surplus that grew to DM 1.8 billion in 1999.

The 1997 economic crisis lowered Indonesia's purchasing power, which was reflected in a sharp decline in German exports from DM 5.2 billion in 1997 down to DM 3.3 billion in 1998 and DM 2 billion in 1999.

Ambassador Gerhard Fulda said that the German government had shifted its priority from fostering economic relations with Indonesia to improving the country's human rights.

"There is no contradiction in fostering economic relations and fostering human rights," Fulda told in a speech before members of EKONID.

He said that human rights would help prevent conflicts and optimize human resources, which were of benefit to the business community.

According to the ambassador, helping Indonesia develop its human rights was in line with helping the country adopt democracy.

"The German government is supporting the transition period," he said.

Fulda, however, later refused to comment on how the policy change would affect economic relations between both countries.

Kleinsteuber said that the change in policy would have only a small impact on EKONID members, as they were largely independent of economic aid from the German government. (bkm)