Speech by Minister Gan Kim Yong at the Indonesia-Singapore Business Forum 2024

His Excellency Bapak Airlangga Hartarto, Indonesia Coordinating Minister for Economic Affairs,

His Excellency Bapak Suryo Pratomo, Ambassador of the Republic of Indonesia to Singapore,

Excellencies, distinguished guests,

1. Thank you for inviting me to speak at the Indonesia-Singapore Business Forum 2024.

2. I would like to begin by congratulating Indonesia on the smooth conduct of this year’s Presidential Election.

a. My colleagues and I look forward to working with both the current and new leadership to continue deepening bilateral cooperation and advancing our mutual economic interests.

3. I would also like to commend the Indonesian Embassy in Singapore for organising this forum at an opportune time.

a. The theme for this year’s Forum, “Beyond the Ballot: Shaping the Future of Business and Investment in Indonesia,” clearly reflects Indonesia’s priorities and aptly describes what many of us hope to learn from today’s discussions.

b. Indonesia is a vast country, with a population of 270 million and an economy of over US$1 trillion.

c. Over the years, Indonesia has built up both its economy to where it is today. In the past decade, other than during the COVID-19 period, it has achieved an annual GDP growth of about 5% over the past decade. This is a remarkable feat, considering the many challenges that had afflicted emerging economies around the world.

d. I hope that the discussions today will highlight the fundamental factors underlying the resilience of the Indonesian economy, and how the Indonesian government plans to continue attracting businesses and investments.

e. The Forum is also an important opportunity for Singapore and Indonesian business leaders to exchange ideas on ways to deepen collaboration and explore new opportunities.

Singapore-Indonesia Bilateral Economic Relations

4. Singapore and Indonesia share excellent bilateral relations underpinned by strong and broad-ranging economic cooperation.

a. In 2023, bilateral trade amounted to S$69 billion, making Indonesia Singapore’s 6^th largest trading partner and one of our largest trading partners in ASEAN.

b. Singapore has also consistently been Indonesia’s top source of Foreign Direct Investments (FDI) since 2014, recording US$15.4 billion of FDI in 2023.

c. We are also amongst each other’s top source of visitor arrivals. In 2023, Singapore welcomed 2.3 million tourists from Indonesia, while Indonesia recorded 1.4 million visitors from Singapore.

5. Both countries maintain regular exchanges and close cooperation at all levels, including at the personal level between Indonesians and Singaporeans, at the corporate level between our businesses, and at the Government level between our Leaders and officials.

a. President Joko Widodo and Prime Minister Lee Hsien Loong held the Singapore-Indonesia Leaders’ Retreat in March 2023, where they reaffirmed the strong bilateral relations between both countries. They also agreed to develop new areas of cooperation that are forward-looking and mutually beneficial. Last week, on 21^st March 2024, the Leaders welcomed a historic landmark in bilateral relations with the entry-into-force of the Expanded Framework, comprising the agreement on the Flight Information Region (FIR), the Extradition Treaty, and the Defence Cooperation Agreement.

b. On the economic front, Minister Airlangga and I co-Chair the annual Six Bilateral Economic Working Groups (6WG), which is a key platform that supports our bilateral economic cooperation across six areas: The Batam, Bintan, and Karimun (BBK) region and other Special Economic Zones; Investments; Manpower; Transport; Agri-business; and Tourism.

c. These platforms and exchanges allow our officials to explore ways to facilitate trade and investment flows and advance economic initiatives benefit our people and businesses.

6. I am heartened that our bilateral economic ties have remained steadfast and resilient over the years, despite headwinds in the global economy.

a. In the past few years, we have experienced geopolitical contestation, the COVID-19 pandemic, the fragmentation of trade and supply chains and a looming climate crisis. These have resulted in structural shifts to our global economy and introduced greater uncertainty and volatility to our operating landscape.

b. Our businesses also had to adapt, innovate, and respond quickly to key pressures arising from digital transformation, the push for sustainability and growing protectionism.

c. For Singapore, these challenges have given us greater impetus to continue our efforts to strengthen and grow our economic partnership. There is ample potential for Singapore and Indonesia to leverage on our complementary strengths and work together to jointly harness existing opportunities, while exploring new growth sectors.

Growth Opportunities in Indonesia

7. The Southeast Asian region will remain a bright spot, which continues to offer many trade and investment opportunities to businesses.

a. In 2022 alone, ASEAN’s combined GDP amounted to US$3.6 trillion. This is projected to grow to US$4.1 trillion by 2035.

b. As ASEAN’s largest economy, Indonesia also had a strong investment performance, attracting a total of US$47.3 billion in FDI in 2023.

8. Indonesia’s strong economic performance can be attributed to the government’s reforms targeted at enhancing its investment environment and boosting investors’ confidence.

9. The 2023 Omnibus Law on Job Creation and the development of the Online Single Submission sent an important signal to the business community that Indonesia remained open to foreign investments and is committed to creating a seamless experience for investors.

10. Indonesia’s passing of the Omnibus Healthcare Bill last year included further reforms that will allow foreign healthcare professionals to practice in Indonesia. These bold moves have allowed Indonesia to further capitalise on its economic potential, making it a choice destination for investors from Singapore, the region and beyond.

11. Singapore and Indonesia have been working closely to facilitate partnerships in the areas of healthcare services, digital health, and biotech.

a. Enterprise Singapore, with the support of Indonesian partners, organised a healthcare mission to Jakarta last October, which saw two collaboration agreements signed. For example, Singapore’s SPACE (MedTech) (“Space Medtech”) and Primaya Hospital Group agreed to jointly tackle cardiovascular diseases in Indonesia, using SPACE (MedTech)’s Congestive Heart Failure Monitoring Technology.

Opportunities in Digital and Green Economies

12. The digital economy and green economy are often regarded as “twin engines” for the future, as they present vast opportunities for economic growth for the region.

Digital Economy

13. Southeast Asia’s digital economy is projected to reach US$1 trillion by 2030. In order to unlock the region’s potential in this space, two critical ingredients are: (i) free and secure data flows, and (ii) a strong pipeline of tech manpower. The first would pave the way for greater connectivity within the region, while the second ensures that our region is equipped with adequate human resources to meet the demands of tech and digitalisation.

14. I am proud to share that our countries have made significant progress in these two areas.

15. On data flows, our regional collaboration under the ASEAN Digital Economic Framework Agreement (DEFA) and other ongoing ASEAN+1 FTAs position our region well to foster a digital environment that is conducive to cross-border data flows, so that our businesses can operate seamlessly in the region. Under Indonesia’s strong leadership as ASEAN Chairmanship last year, ASEAN endorsed the DEFA Study, which provided a strong foundation for the ongoing negotiations. This has also injected positive momentum to further develop the region’s digital infrastructure and connectivity.

a. To complement efforts on this front, our officials have also been championing for clearer regulations on cross-border data flows between Singapore and Indonesia.

b. The BBK region, in particular, stands to benefit from this as companies based in Singapore can tap on the digital services offered by BBK. This will also enhance the region’s attractiveness as an emerging digital hub.

c. Beyond BBK, clearer regulations on cross-border data flows will also facilitate more Data Centre investments into other parts of Indonesia.

16. On tech manpower, both sides have collaborated closely to further the development of young and skilled professionals from both countries. In March 2023, on the sidelines of the Leaders’ Retreat, Minister Airlangga and I signed a Memorandum of Understanding establishing the Tech:X Programme. The Programme will allow fresh graduates from Singapore and Indonesia to pursue short-term, tech-related job opportunities in each other’s countries.

a. Businesses will also benefit from access to a wider pool of young tech professionals across both countries. This will also facilitate overseas postings for their staff.

b. Once launched, the Singapore-Indonesia Tech:X Programme will be an important pathfinder for the region, as we work to grow the tech workforce in ASEAN.

Green Economy

17. Climate change is a profound and shared challenge. Across the world, countries are racing toward net-zero, while balancing energy security and economic competitiveness. Close bilateral and regional collaboration will allow us to not only achieve our vision but to also unlock sizeable potential of over US$2 trillion in new investments, with the creation of over 5 million new jobs.

18. In recent years, Singapore and Indonesia have made concerted efforts to deepen collaboration in climate change and energy.

a. In March 2023, we signed an MOU on Renewable Energy Cooperation, followed by another MOU on Low-Carbon Energy and Cross-Border Electricity Interconnection in September.

b. In September 2023, the Energy Market Authority of Singapore (EMA) granted Conditional Approvals for the import of two gigawatts of low-carbon electricity from Indonesia to Singapore, from projects developed by companies from both countries. These projects will involve the installation of the largest solar and battery manufacturing plants in Indonesia. It will not only serve the energy needs of both Indonesia and Singapore but will also attract new green investments in Indonesia. This will contribute to the integration of our national power systems as part of the ASEAN Power Grid.

c. Most recently, in February 2024, Singapore and Indonesia announced the signing of a Letter of Intent (LOI) to collaborate on cross-border carbon capture and storage, or CCS. The LOI establishes a working group that will work towards a legally binding agreement to enable cross-border transport and storage of carbon dioxide between Singapore and Indonesia. This is a significant development which was enabled by Indonesia’s presidential regulation on CCS issued on 30 January 2024.

19. At the business-to-business level, we have also seen strong partnerships between Singapore and Indonesia companies in the green economy. Notably, Singapore’s Sembcorp Industries and Indonesia’s PLN are collaborating on utility-scale solar projects, including in Nusantara, the future capital city of Indonesia. Singapore companies like Keppel Infrastructure and Sembcorp Industries are also exploring green hydrogen opportunities with partners in Indonesia.

20. These examples are a strong signal of our countries’ commitment to pursue win-win opportunities that support our climate and economic objectives.

Closing

21. Singapore and Indonesia are longstanding economic partners. Even so, there remains much potential for us to explore and further cooperation, especially in new growth areas. I look forward to new ideas and partnerships from our business communities. Let us work together to seize new opportunities and advance areas of mutual interest for the benefit of both our economies.

22. Thank you, and I wish you all a fruitful afternoon.