S'pore keeps neighborly with RI investment
S'pore keeps neighborly with RI investment
Kornelius Purba
The Jakarta Post
Jakarta
Tiny but wealthy Singapore wields its financial might in
the region, including in investment in Indonesia. The city state
is the third largest foreign investor in the country after
Malaysia and Saudi Arabia. In 2001, Singapore companies were
involved in 154 projects with investment value worth US$1.139
million.
Singapore has been one of the top six foreign investors
in Indonesia for the last five years. In terms of value, however,
it dropped significantly in the same period (with the exception
of the year 2000) in tandem with the slump in overall foreign
investment in Indonesia.
President of the Singapore Association in Indonesia (SAI)
Peter Chao said Indonesia remained an important site for
investment. Although investors face great challenges in the short
term, the country was bound to become attractive again for medium
to long-term investment due to its large population and rich
natural resources, among other draws.
"Indonesia is very diversified not only in culture but
also in resources," said Chao, whose own company operates in the
furniture business.
Of the 154 projects, 124 are new ones while the remaining
30 underwent a change in status from domestic to foreign owned.
Although new projects represents 80.5 percent, the total value of
all new projects only makes up 15.6 percent of the total
investment value.
Only eight projects were worth more than $5 million.
For new foreign owned (PMA) projects, 40 percent are in
services, like contractors in the oil and gas industry,
consultancies, freight forwarders, as well as food and beverages.
According to Chao, 36.3 percent (33 projects) of the new projects
are located in Batam, which is strategically located only a few
kilometers from Singapore. The next favorite destinations are
West Java and Jakarta, absorbing a 24.7 percent of new projects
worth $43.98 million. Bintan island, another neighbor of
Singapore, ranks third, with eight projects there worth $38.61
percent.
According to SAI data, the investment data trend line
behaves inversely to the number of projects trend line. When
investment performance deteriorated during the economic crisis
from 1997 to 2001, the average project size shrunk. The number of
projects increased but, conversely, when investment performance
showed an upward trend in 2000, the average project size
increased but the number of projects decreased.
"When sentiments were down, there were less big-item
projects, but many more small ones, whereas when sentiments were
up, there were slightly more big projects, but fewer small ones,"
said Chao.
He warned that the investment map had changed in recent
years, and there was no room for complacency in securing
investment dollars. "Indonesia is facing great challenges in the
severe competition with other countries for foreign direct
investment."
The former diplomat said the implementation of regional
autonomy tended to increase costs for foreign companies, because
provincial authorities and regencies often impose levies on
foreign companies in addition to those exacted by the central
government.
"It also takes a longer time to process investment
permits now. You also have to deal with more people," he said.
Chao urged the government to embark on comprehensive
investment policies because the country's attractiveness to
foreign investors was almost lost.
"You have the future but you must work harder now," said
Chao.
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