Mr Lim Hng Kiang at the Indonesia New Investment Climate & Business Opportunities Forum 2010, 31 Mar 2010

WELCOME ADDRESS BY MR LIM HNG KIANG, MINISTER FOR TRADE AND INDUSTRY AT THE INDONESIA NEW INVESTMENT CLIMATE & BUSINESS OPPORTUNITIES FORUM 2010 ON WEDNESDAY, 31 MARCH 2010  "SINGAPORE AND INDONESIA: SEIZING OPPORTUNITIES FOR MUTUAL GROWTH”

Mr Gita Wirjawan, Chairman of Investment Coordinating Board of

Republic of Indonesia (BKPM),

H.E. Wardana, Indonesian Ambassador to Singapore,

Mr Tony Chew, Chairman of Singapore Business Federation,

Distinguished Guests,

Ladies and Gentlemen,

INTRODUCTION

It is my pleasure to join you today at this “Indonesia New Investment Climate and Business Opportunities Forum 2010”. Let me begin by extending a very warm welcome to Mr Wirjawan on his inaugural business forum in Singapore.

This is also the first year that this business forum has been organised by BKPM, together with Singapore Business Federation (SBF), IE Singapore and Network Indonesia.As can be seen from the strong turnout today, there is a high level of interest from our businesses to find out more about investment opportunities in Indonesia, and how we can work together to translate these opportunities into mutually beneficial cooperation.

And there is no better time than now to pursue such endeavours. Let me elaborate.

WORLD RECOVERY IS ON TRACK

Major economies around the world have emerged from recession. Trade flows and industrial production have also picked up strongly. The IMF recently revised its forecast of the global economy upwards by three-quarters of a percentage point, to growth of 3.9% in 2010

[1]

.As consumer and business sentiments worldwide improve on brighter prospects of a global recovery, companies which are prepared to capitalise on the upturn will have the first-mover advantage.

REGIONAL ECONOMIC OUTLOOK IS POSITIVE

On the regional front, a similar sense of optimism abounds in economies across Asia. Notwithstanding the recent turbulence in the global financial markets, the fundamentals for Asia remain strong and prospects for growth in 2010 are good. The Asian growth story looks even more promising in the longer term.The WTO estimates that, by 2020, 60% of global trade flows will be accounted for by Asia, which will replace North America and Europe as the centres of global trade.

ASEAN is well placed to ride on this growth. When we achieve the ASEAN Economic Community (AEC) by 2015, we will position ASEAN as a substantial economic entity alongside markets like China and India. The creation of an integrated marketplace of close to 600 million people, with a combined domestic GDP of about US$1.1 trillion, will inject dynamism into Asia and enhance the overall attractiveness of the region to investors.

For Singapore businesses, ASEAN’s growing market serves as a natural first step out of our borders. Many of our successful companies first started serving the ASEAN market before they expanded more widely onto the global stage.

INDONESIA’S POTENTIAL

For Indonesia, it has emerged, over the last decade as a middle-income economy

[2]

.The rapid urbanisation of Indonesia’s 236 million population means that more than 50% of the population now lives in urban areas. With a large domestic population and buoyant levels of consumption, there is potential for domestic demand to grow further, presenting opportunities for businesses looking to enter the Indonesian market.

Indonesia’s economy performed very well last year.It was one of the few countries in Asia to register healthy growth amidst the backdrop of a global financial crisis.The economy grew 4.5%, the third-highest of the G20 countries after China and India. Bank Indonesia, Indonesia’s central bank, expects the economy to continue growing by 5.5% to 6.0% in 2010

[3]

.

The positive outlook of the Indonesian economy is a reflection of its resilience and the commitment of the Indonesian government to continuously review and implement pro-business measures.Under the leadership of President Susilo Bambang Yudhoyono, Indonesia has taken steps to reform its business and investment climate.An example is the introduction of a “one-stop shop system” and later the National Single Window for Investment (NSWi), which has made it easier and faster for investors to obtain their business licenses.

OPPORTUNITIES FOR SINGAPORE BUSINESSES

Singapore businesses are well-positioned to ride on Indonesia’s growth potential, given the strong economic relationship and geographical proximity we share.Having consistently been among each other’s top trading and investment partners, our business communities have established strong linkages over the years.Last year, Indonesia was Singapore’s fifth largest trading partner with total bilateral trade amounting to S$58.5 billion.According to BKPM, Singapore was also the top source of realised investments into Indonesia, accounting for almost US$4.4 billion in 2009.

While Singapore’s investments have traditionally flowed into Jakarta and the Batam-Bintan region, companies have also recognised the potential of the larger Indonesian market and have invested in other regions of Indonesia in recent years. Two examples include KeppelLand, which has developed a retail mall in Surabaya, and Killiney Kopitiam, with several outlets in Medan.

Given the diversity of the Indonesian archipelago, each region offers unique business potential for our businesses.Large urbanised cities like Jakarta, Surabaya and Bandung offer opportunities in F&B, retail, telecommunications, banking, real estate and logistics.On the other hand, resource-rich cities like Balikpapan and Makassar have growth potential for downstream products and services, such as engineering, logistics, processing, as well as hospitality and urban infrastructure.

And these opportunities extend to SMEs as well. We have seen an increasing number of SMEs exploring opportunities to grow their businesses in Indonesia. A recent business seminar on “Doing Business in Indonesia” co-organised by Network Indonesia and the Association of Small and Medium Enterprises (ASME) saw an encouraging turnout of more than 60 SME participants. Similarly, just four weeks ago, the Singapore Manufacturers’ Federation (SMa) led a business mission of 18 companies to Jakarta, many of whom were SMEs.

CONCLUSION

I strongly encourage our companies to seize these growing opportunities in the region and in Indonesia.

For big companies, leverage on the strong business linkages and the Singapore brand name to forge winning partnerships abroad.For SMEs, take advantage of the existing schemes available, such as IE Singapore’s Internationalisation Capability Development Programme (iCDP) and SME Market Access Programme (SME MAP), to help your business internationalise.

On this note, I would like to wish everyone a productive day of networking and business.Thank you. 

[1] IMF World Economic Outlook, Jan 2010.

[2]World Bank’s Indonesian Economic Quarterly Dec 2009.The World Bank defines “middle-income economy” as developing economies with GNI per capita between $975 and $11,905. Indonesia is in the lower end of the group.

[3]Bank Indonesia Press Release No. 12/13/PSHM/Humas, http://www.bi.go.id/web/en/Ruang+Media/Siaran+Pers/SP_11032010.htm, 11 Mar 2010