Singapore companies urged to ride on Indonesia’s growth coattails
by Mohamed Hairul Borhan
Tue, 06 Apr 2010
IES/Singapore companies urged to ride on Indonesia’s growth
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By Mohamed Hairul Borhan
Indonesia’s vast geography and plentiful natural resources continue to present plenty of opportunities for Singapore companies, said Minister for Trade and Industry Lim Hng Kiang.
In his speech at the “Indonesia New Investment Climate and Business Opportunities Forum”, he said that every Indonesian region offers unique business opportunities.
For example, urbanised cities such as Jakarta, Surabaya and Bandung are suitable for food and beverage, retail, telecommunications, banking, real estate and logistics industries.
Cities such as Balikpapan and Makassar, which are rich in natural resources, provides opportunities in downstream products and services such as engineering, logistics, processing, hospitality and urban infrastructure.
Mr Lim added that Singapore and Indonesia have always enjoyed a close and strong bilateral relationship. In 2009, Indonesia was Singapore’s fifth largest trading partner, with bilateral trade amounting to S$58.5 billion.
Singapore was also Indonesia’s top source of realised investment, accounting for almost US$4.4 billion in 2009.
Mr Lim said, “While Singapore’s investments have traditionally flowed into Jakarta and the Batam-Bintan region, companies have also recognised the potential of the larger Indonesian market and have invested in the other regions of Indonesia in recent years.”
Bent on attracting foreign investments
Gita Wirjawan, Chairman of the Indonesia Investment Coordinating Board (BKPM), said that the Indonesian government is keen to attract foreign investments, especially from Singapore and around the region.
He said, “Singapore has been a great partner for many many years and it (the relationship) is not going to change.” He revealed that Singapore has been the single biggest investor in Indonesia for the past five years and the country will pay “special attention” to continue attracting Singapore companies.
Mr Wirjawan added that the Indonesian government will also focus on promoting the country to the rest of the “Asian Plus” countries, which are China, the Middle East, India, as well as the rest of the developed markets.
He said that the government is committed to reviewing its existing policies to make it easier to invest in Indonesia.
For instance, he said that foreigners may be allowed be own apartments and commercial properties by the third quarter of this year. The move is likely to become an additional source of foreign capital inflows and may draw more investors wanting a piece of the action in Southeast Asia’s biggest economy.
He is optimistic that the move would reap plenty of benefits for the country as property prices in Indonesia are undervalued against those in Singapore and even Ho Chi Minh City in Vietnam.
Open up “closed” sectors
Moving forward, the government will also open up some sectors which were previously off-limits to foreign investments. These include industries such as healthcare, education, logistics and agriculture.
Also in the pipeline is a complete overview of land and labour laws, added Mr Wirjawan. Focus will also be given to ramp up the country’s infrastructure. According to Mr Wirjawan, only 125 kilometres of toll roads were build between 2004 and 2009. This was short of the 1,000 kilometres originally planned.
To catch-up, he revealed that the Indonesian government is planning to woo US$90 billion of private infrastructure investment in the next five years. All this is part of a US$140 billion infrastructure spending plan, which portray Indonesia as an excellent choice for foreign investment in Asia.
The event, which included presentations from investment board representatives of Balikpapan, Bandung, Jakarta, Riau Islands and Gorontalo, was jointly organised by BKPM, the Embassy of the Republic of Indonesia in Singapore, the Singapore Business Federation, Network Indonesia and IE Singapore.
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