1. A very good afternoon to Ibu Retno Marsudi, Minister for Foreign Affairs of the Republic of Indonesia; Bapak Bahlil Lahadalia, Chairman of the Indonesian Investment Coordinating Board; Bapak Suryo Pratomo, Indonesian Ambassador to Singapore; and other colleagues joining us today.
2. It is my pleasure to join you via videoconference today for the exchange of the Instruments of Ratification (IOR) and entry into force of the Singapore-Indonesia Bilateral Investment Treaty (BIT).
3. I recall that Ibu Retno and I had signed the BIT in the presence of our leaders at the sidelines of the Singapore-Indonesia Leaders’ Retreat on 11 October 2018 in Bali, Indonesia. I am glad that after more than two years of hard work, both countries have completed our respective domestic ratification processes and the BIT can now enter into force.
Strong Bilateral Economic Ties
4. Singapore and Indonesia enjoy strong and broad-ranging bilateral ties. The entry into force of the BIT, even amidst the COVID-19 pandemic, strengthens this partnership and sends an important signal to both countries and partners in the region, of our strong commitment to continue to hone this relationship.
5. Last year, Singapore was Indonesia’s largest foreign investor. We are happy to have held this position since 2014 and hope that the investments will continue to grow. Our investments in Indonesia increased by 6.5% year-on-year to reach a record US$9.8 billion in 2020, despite the COVID-19 situation.
6. Indonesia continues to be an attractive investment destination for Singapore companies. This is reflected by the continuous flow of investments into Kendal Industrial Park in Central Java, and Nongsa Digital Park in KEPRI.
7. Kendal Industrial Park, or KIP, has made good progress since its opening in 2016, with almost 9,000 jobs created and US$ 1.37 billion worth of investments pumped in. There are currently more than 60 committed tenants in KIP.
8. The Indonesian government officially designated KIP as a Special Economic Zone in December 2019. This is an important milestone that signals both countries’ commitment to KIP’s development, and is a signal of the confidence in its potential as a key node in Indonesia’s industrial landscape.
9. The successful development of KIP would also attract investments and spur the development of its surrounding region. We are therefore exploring other infrastructure developments, including the development of Kendal Port. This would improve the logistical and infrastructure connectivity of the Kendal region, making it even more attractive to investments.
10. As the digital economy grows in significance, it is also important that Singapore and Indonesia continue to find ways to deepen our partnership on this front. Nongsa Digital Park has served as a “digital bridge” for tech companies in both Singapore and Indonesia. Since its launch in 2018, Nongsa Digital Park has grown from a handful of companies and employees to more than 150 companies and start-ups, and over 900 tech developers and creative staff. These companies are from a wide variety of sectors, including finance, human resource, and real estate.
11. Nongsa Digital Town, an expansion of Nongsa Digital Park, was recently launched on 2nd March. With the global shift towards online platforms and digital solutions in the wake of the pandemic, this expansion will enable tech companies in Singapore and Indonesia to find more synergies, and capture the growing opportunities in the digital space.
12. The Batam, Bintan, and Karimun - or BBK - region, remains a cornerstone of Singapore and Indonesia’s strong bilateral economic ties. In the 1990s and early 2000s, the manufacturing sector in BBK contributed significantly to Indonesia’s economic growth. The region has benefited from various factors, including the strong connectivity with Singapore, Batam’s status as a Free Trade Zone, and a conducive investment climate.
13. BBK continues to hold much potential as an engine of economic growth for Indonesia, especially with the reorganisation of supply chains due to the COVID-19 pandemic. Singapore remains keen to collaborate with Indonesia to reinvigorate BBK’s economy, by facilitating new investment opportunities and addressing the various logistical, administrative and regulatory issues faced by businesses together.
Benefits of the BIT
14. As we continue to pursue bilateral economic opportunities, I am confident that the BIT will further boost Indonesia’s attractiveness to Singapore companies. The BIT provides additional protection for Indonesia’s investments in Singapore, and Singapore’s investments in Indonesia. This includes protection from discriminatory treatment and illegal expropriation. In the event of a dispute, the BIT provides investors recourse to international arbitration.
15. I hope that the certainty provided by the BIT will promote greater investment flows between Singapore and Indonesia. This, in turn, would facilitate greater trade flows and closer business-to-business ties between our two countries.
16. Singapore and Indonesia also signed the updated Avoidance of Double Taxation Agreement (DTA) during President Halimah Yacob’s visit to Indonesia in February 2020. The updated DTA will lower the tax burdens on investors from Singapore and Indonesia when they invest in each other’s countries. This will appeal to investors on both sides who are looking to invest or expand their businesses in the other market. I hope that the updated DTA can also enter into force soon.
17. There is also significant interest from Singapore companies in Indonesia’s Omnibus Law on Job Creation, which was enacted in November last year. The Indonesian government’s efforts at streamlining regulations and improving the quality and productivity of Indonesia’s workforce through this Law will encourage greater potential investments.
18. Together with the Omnibus Law, the BIT and DTA will strengthen the overall regulatory framework for investments between Singapore and Indonesia and continue to boost the confidence of our business communities as they venture into each other’s markets. This will allow Singapore and Indonesia to leverage each other’s strengths towards post-pandemic economic recovery.
19. While much has been done, we look forward to doing even more with Indonesia in the years ahead. Today marks a significant milestone but it will not be the end of our bilateral cooperation journey. In fact, this brings us to a new milestone where we look forward to launching other worthwhile projects.
20. Thank you.