Susilo told to fix investment climate
Zakki P. Hakim, The Jakarta Post, Singapore
Singapore is hopeful that Indonesia's business climate will improve following its successful presidential election, Prime Minister Lee Hsie Loong said here on Monday.
"In Indonesia, a new president is elected. The markets have reacted positively to the election of Dr. Susilo Bambang Yudhoyono as president, and investors are looking forward to an improvement in the business climate," Lee said in part of a speech to open the annual investment and trade forum, the Global Entrepolis @ Singapore (GES) 2004.
The five-day event involves some 10,000 participants from 30 countries, including a delegation from the Indonesian Chamber of Commerce and Industry (Kadin).
In a brief meeting later in the day with Kadin chairman M.S. Hidayat and other officials, Lee said he also expected Indonesia would recover from its economic problems under Susilo, who has so far received a positive response from financial markets.
"Next month, the Prime Minister will visit Jakarta to congratulate the new president," Hidayat said, adding that Singapore would soon urge a meeting with senior officials and business players from the private sector of both countries.
Susilo will be sworn in on Oct. 20, when he is also expected to announce his Cabinet.
Analysts have said Susilo needed to form a credible and business-friendly Cabinet to indicate to the investment community that he was determined to resolve the various uncertainties that have discouraged investors from entering the country.
Singapore is a major source of foreign investment, which is crucial for accelerating economic growth, but which has been weakening over the past few years.
According to the Investment Coordinating Board, foreign direct investment from the city-state reached US$692.4 million last year through 5,000 companies, making it the fifth largest investor to Indonesia.
For the past couple of years, Singaporean firms have been aggressive in buying key local assets. Recent acquisitions include: 42 percent shares in telecommunications company PT Indosat by Singapore Technologies Telemedia; 62 percent shares in Bank Danamon by a consortium led by Temasek Holdings; ownership of Bank International Indonesia by a consortium comprising Temasek and South Korea's Kookmin Bank; and 34.3 percent shares in automotive giant PT Astra International by Singaporean auto firm Cycle & Carriage.
Meanwhile, Singaporean Foreign Minister George Yeo urged in an earlier meeting with Kadin officials that the next government resolve legal uncertainties, complex investment regulations and unfavorable labor laws to attract new investment to the country.
"Investment regulations have been confusing businesses," Hidayat quoted Yeo.
Yeo also promised that Singapore would encourage its businesses and their partners to invest in Indonesia if the new government simplified regulations and ensured fair competition.
GES expects to attract more than 3,000 leading executives, entrepreneurs and venture capitalists from across the globe, with high participation from India and China, as well as the U.S., Japan, Russia, Korea and regional groups from Southeast Asia, the Middle East and the European Union.