RI's recovery boosts ASEAN's attractiveness
RI's recovery boosts ASEAN's attractiveness
Riyadi Suparno, The Jakarta Post/Kuala Lumpur
Being the largest ASEAN member country, Indonesia's economic
recovery would boost the attractiveness of the region as a trade
partner and an investment destination, experts said here on
Friday.
Manu Bhaskaran, a partner at the Centennial Group Inc. of
Singapore, noted that Indonesia's on-track recovery was one
factor bringing back investment into Southeast Asia. Others, he
said, were the beginning of a new investment cycle and improving
competitiveness across the region.
Speaking at the 2005 Euro Conference here, Bhaskaran noted
that despite its lingering problems, Indonesia under President
Susilo Bambang Yudhoyono had already had more successes than
failures.
He said Susilo had given the market a clear direction on where
his administration was heading. Combined with a strong
anticorruption drive, this had increased business confidence in
Indonesia, he said.
The President had also been successful in settling several
important overdue problems, including the Cepu oil block dispute
with U.S. energy giant ExxonMobil, and had moved to cut oil
subsidies, although they remained high, Bhaskaran said.
Corporations were also responding positively to the
government's moves to enforce good governance in the public and
private sectors, he said. Banks had stepped up lending to small
and medium enterprises, and international firms had increased
their investments in the region as confidence among foreign
investors and donors improved.
Bhaskaran said the country was now on track toward high
economic growth of more than 6 percent, a figure that could be
reached next year. This would help resolve Indonesia's long-
standing problem of high unemployment, he said.
Indonesia's recovery was in line with the robustness of other
economies in the region, and this had increased demands for
infrastructure projects and the development of other sectors, he
said.
Mirando Goeltom, the senior deputy governor of Bank Indonesia,
said things were looking good for Indonesia amid sluggish global
economic growth, which was mired in uncertainties about the
future. However, he cautioned inflationary pressures from the
instability of the exchange rate could undermine the country's
performance.
Narongchai Akrasanee, Thailand's former minister of commerce,
said ASEAN, with its large market of more than 500 million
people, represented a huge potential for growth.
However, he also warned that investors were increasingly
seeing non-traditional risks emerging from the region, including
the SARS epidemic of 2003, the more recent bird flu outbreak,
earthquake and tsunami risks, and the remaining high risk of
terrorist attacks in some parts of the Philippines, Indonesia and
Thailand.
Otherwise, the region was a strong contender to be a major
trading partner and investment destination for countries in the
European Union, he said.
The EU has in recent years become the largest investor in the
region, overtaking Japan and the United States.
Narongchai noted that the establishment of Trans-Regional EU-
ASEAN Trade Initiative (TREATI) in 2003 could pave the way for a
freer trade between the two regions.
Under the TREATI framework, the two parties have agreed to
focus on six areas -- agriculture, fisheries, electrical and
electronic goods, forestry, trade and investment facilitation.
Narongchai suggested that the EU and ASEAN consider
formalizing their relations through formal institutions, such as
an ASEAN-EU joint secretariat, business council and a free trade
agreement.
FDI flows into ASEAN
(billions of U.S. dollars)
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1995 2000 2003
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28.1 23.4 19.3
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Source: ASEAN Statistical Yearbook, 2004