H.E. Hatta Rajasa, Coordinating Minister for Economic Affairs, Republic of Indonesia,

 

H.E. Andri Hadi, Indonesia Ambassador to Singapore,

 

Mr Suryo Bambang Sulisto, Chairman of Indonesia Chamber of Commerce and Industry (KADIN),

 

Mr Tony Chew, Chairman of Singapore Business Federation,

 

Distinguished Guests,

 

Ladies and Gentlemen,

 

It is my pleasure to join you today at the Indonesia Singapore Business Forum 2012.   Let me begin by extending a very warm welcome and appreciation to Minister Hatta Rajasa for taking time off his very busy schedule to join us today.  His presence at this Business Forum today clearly highlights the importance of the bilateral economic relations between Singapore and Indonesia.

 

I am also happy to see such a strong turnout this afternoon. It is a reflection of our companies’ strong interest to find out more about business opportunities in Indonesia.

 

There is no better time than now for all of us to work together to translate these opportunities into mutually beneficial cooperation.  Let me elaborate.

 

The global economic environment continues to remain uncertain, and its consequences of the uncertainty are still unfolding.  However, the fundamentals for Asia remain strong.  Longer-term trends also give us reasons to be optimistic that the prospects for growth in this region remain strong.  According to the International Monetary Fund (IMF), growth in Asia is expected to expand at around 6 per cent this year, much higher than the overall 3.5 per cent growth forecasted for the global economy. 

 

Emerging Asia therefore will be an important driver of global economic growth.  With Singapore strategically located in the heart of Asia, this lends greater impetus for our local companies to look at this region to expand our businesses.

 

 

It is in this context that the Indonesian growth story looks promising.   Over the last few years, Indonesia’s economy has performed extremely well by managing positive growth through the global financial crisis in 2008/2009 and achieving more than 6 per cent growth in both 2010 and 2011.  In 2011, the Foreign Direct Investment (FDI) to Indonesia reached US$19.6 billion.  This is almost twice as much as it was five years ago.

 

Indonesia’s middle-class population has also expanded rapidly in recent years and this is the source of a very strong domestic consumption. Therefore, the Indonesian market presents opportunities for Singapore businesses looking to tap into this significant domestic consumption base. 

 

The positive performance of the Indonesian economy is also a reflection of the commitment of the Indonesian government to continuously review and implement pro-business measures.  For instance, the Masterplan for the Acceleration and Expansion of Indonesia Economic Growth (MP3EI) is a positive step, as Indonesia presses ahead with new initiatives to improve its business environment and accelerate economic development.

 

Given our deep bilateral economic relations and geographical proximity, Singapore companies are well-positioned to tap onto Indonesia’s growth potential. Last year, Indonesia overtook the US to become Singapore’s fourth largest trading partner with total bilateral trade rising to S$78 billion.  Singapore has also been the top source of realised investments into Indonesia since 2009, contributing some US$5.1 billion last year. 

 

Over the years, business communities in both countries have established strong linkages.  An excellent example is our cooperation in the Batam, Bintan and Karimun (BBK) Free Trade Zones.  By combining the complementary strengths of both countries into a package that is competitive and attractive to investors, we have succeeded in marketing a compelling value proposition of an integrated supply chain to potential third country investors.  With the rising cost of doing business in China, there is a precious window of opportunity for BBK to recapture the attention of foreign investors. We will work harder together to achieve this potential.

 

Apart from the BBK, large urbanised Indonesian cities like Jakarta, Surabaya, Medan and Bandung continue to offer good opportunities for companies in the F&B, retail, and real estate sectors. As for those in the engineering, logistics, food processing and urban infrastructure sectors, opportunities abound in the resource-rich regions such as Kalimantan and Sulawesi.

 

While our companies will find it familiar to do business in Jakarta and the Batam-Bintan region, many have also come to recognise the untapped potential of the larger Indonesian market.   To address the growing interest by companies to explore opportunities in other regions in Indonesia, such as East Indonesia, IE Singapore opened its second Indonesia office in Surabaya last year. 

 

The Indonesia domestic market also provides opportunities for the Small and Medium Enterprises (SMEs) to ride on the consumer wave in Indonesia.  In particular, Singapore and Indonesia SMEs can collaborate to create new business opportunities available in the Indonesian market.  There are clear complementary strengths in this partnership - Indonesia companies bring with them their market reach and market intelligence, and Singapore companies bring with them their capital, technology and new products to these markets.

 

In today’s dynamic business environment, our companies do face keen competition.  Against this backdrop, I strongly urge our local companies to seize the opportunities which I have just elaborated.   Explore beyond the traditional cities to find new growth markets in other parts of Indonesia.  Make full use of our strong business linkages and the Singapore brand name to forge winning partnerships in Indonesia.