Indonesia and the region beckon

Workers construct a new toll road, which will connect Depok's administrative town to Jakarta, in this August 31, 2010 file photo.Picture: Reuters

Sunday, February 26, 2012

IN INVITING more Singaporean investment, Indonesian Trade Minister Gita Wirjawan has rightly underlined his country's sustained economic growth in recent years.

Its attractiveness is amplified by the size of its population and an inevitable rise in its purchasing power. From 2000 till last year, its average annual gross domestic product growth was 5.3 per cent - a more than respectable figure for a country of 240 million people which is South-east Asia's biggest.

That growth has been accompanied by economic resilience and stability. Indonesia, which was so badly hit in the Asian economic crisis of 1997-1998 that it needed to be bailed out by the International Monetary Fund, avoided a recession during the 2009 global downturn.

Its strong economic fundamentals have attracted substantial foreign direct investment, which reached a record US$20 billion last year.

That represented a handsome 18.4 per cent rise over 2010. Singapore led the list of foreign investors with US$5.1 billion, followed by Japan and the United States.

Singapore's investors and businessmen clearly recognise Indonesia as having strong potential, and its performance of late has cemented its place as one of ASEAN's economic stars.

They are familiar with the political and economic workings of countries in the neighbourhood - Malaysia and Thailand included - where opportunities abound, and have knowledge of business and cultural practices, without which it is difficult to penetrate the market, develop lasting business relationships and grow networks. Indonesia has just joined the international league of trillion-dollar economies and is doing so well in spite of some widely noted and documented problem areas: opaque regulations, corruption, poor infrastructure and labour laws that are often not business-friendly.

The government's pledge has been to deal firmly with such issues.

Doing so successfully will be an added boost to a burgeoning economy.

What investors here can do, as Gita noted, is to use their experience and know-how to help Indonesia climb up the value chain. Singapore capital, coupled with Indonesia's natural resources and human resource potential, can be a winning combination. This kind of cooperation has worked for the countries previously, and holds promise in such areas as the Iskandar Malaysia development region in south Johor.

Strong linkages and a framework of agreements inked by governments provide the certainty that businesses seek as they venture out.

Growing mutual investment by and in countries in the neighbourhood will add momentum to the creation of an Asean regional economic community - an essential development if South-east Asia is to hold its own in an era marked by the rise of China and India.

The Straits Times/ANN

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