ADDRESS BY MR LIM HNG KIANG, MINISTER FOR TRADE AND INDUSTRY (TRADE), AT THE SMF BUSINESS SEMINAR ON "INDONESIA-SINGAPORE BUSINESS PARTNERSHIPS 50 YEARS AND BEYOND”, MANDARIN ORCHARD SINGAPORE, IMPERIAL BALLROOM (LEVEL 35), 17 JANUARY 2017, 3.05PM
Your Excellency, Bapak Abdurrahman Mohammad Fachir, Vice Minister of Foreign Affairs, Republic of Indonesia;
His Excellency, Bapak Ngurah Swajaya, Ambassador of the Republic of Indonesia to Singapore;
Mr Douglas Foo, President of the Singapore Manufacturing Federation;
Distinguished guests;
Ladies and Gentlemen
1 Good afternoon. It is my pleasure to join you at this seminar. I am glad to see many business leaders gathered here today. Your presence is a sign of the strong economic ties between Singapore and Indonesia.
Strong Bilateral Ties
2 Singapore and Indonesia enjoy an enduring bilateral relationship which has grown from strength to strength. A hallmark of our bilateral relations is the robust economic ties we share. In 2015, Singapore was Indonesia’s third largest trading partner and Indonesia was Singapore’s fourth largest trading partner. Singapore was also Indonesia’s largest foreign investor. For the first nine months of 2016, Singapore companies invested almost US$7.1 billion in Indonesia, double that for the same period in 2015. This maintains our position as Indonesia’s largest foreign investor. We are also among each other’s top sources of tourist arrivals.
3 Singapore and Indonesia engage regularly on economic matters. First, both countries have established the Six Bilateral Economic Working Groups, or 6WG, which I co-chair with Coordinating Minister for Economic Affairs, Bapak Darmin Nasution. Some of the outcomes achieved through the 6WG include establishing business-to-business partnerships in the energy and agribusiness sectors, and increasing our bilateral tourism flows. Second, there are close interactions between both sides at all levels of government. For example, MTI and our economic agencies IE Singapore, EDB and STB have an established presence in Indonesia. Third, Singapore and Indonesia also work closely on economic matters at international fora such as ASEAN, APEC and the WTO.
4 Just two months ago, we had the annual Leaders’ Retreat between PM Lee and Bapak President Joko Widodo in Semarang, Indonesia where economic collaboration featured prominently. Several Memoranda of Understanding were signed to promote closer economic cooperation and our Leaders officiated the opening of the new Kendal Industrial Park – a joint venture between Singapore’s Sembcorp and Indonesia’s PT Jababeka – near Semarang, Central Java. To add value to Singapore and Indonesia’s partnership, our leaders also agreed to form an Indonesia-Singapore Business Council, which will allow businesses to network and more deeply understand opportunities on both sides. We look forward to welcoming Bapak President to Singapore this year for the next Leaders’ Retreat.
5 2017 is a significant year for Singapore and Indonesia as it marks the 50th anniversary of diplomatic relations. We should continue to build on our existing bilateral relations to further expand economic cooperation and strengthen ties between businesses that will produce concrete and mutually beneficial outcomes.
Indonesian economy – challenges and opportunities
6 Indonesia’s economy has performed very well over the past decade. Macroeconomic conditions have improved. Government debt as a share of GDP is also lower than the majority of advanced economies. Bapak President Joko Widodo and his government have taken concrete steps to strengthen the Indonesian economy. He has:
(i) Trimmed the longstanding fuel subsidies;
(ii) Streamlined business permit processes to enhance the investment climate; and
(iii) Revised Indonesia’s Negative Investment List to remove and reduce foreign ownership restrictions on businesses in selected areas.
7 These steps, coupled with Indonesia’s robust economic fundamentals – the size of its economy, growing urbanization and middle class, as well as its demographic dividend – will help position Indonesia for stronger growth over the long term. Indonesia has also made good progress to promote a business friendly environment.
8 There are, however, some challenges. Like Singapore, Indonesia’s economy is facing some headwinds with a sluggish global economy, and greater uncertainty amidst a rising tide of anti-globalisation and protectionist sentiment. It is essential that we do not get pulled along by this, towards a direction that will hurt our economies. Understandably, there is anxiety over external competition. However, the benefits of comparative advantage and collaboration should far outweigh concerns. Individual economies can only grow stronger with open markets and mind-sets. Conversely, overprotection could hamper our companies, as they would not be equipped with the knowledge, ability, and strength to adapt and navigate difficult global changes.
9 We are fortunate to be situated in Asia, one of the fastest growing regions in the world. Indonesia is one of the countries in the region with good potential for our companies to do business with. Indeed, we are building upon a strong base, given our excellent economic ties. The fact that Indonesia is one of our closest neighbours also means that our companies, especially our SMEs, would naturally place Indonesia high on their priorities when making overseas forays for the first time.
10 Singapore companies recognise Indonesia’s growth potential and are actively on the look-out for economic opportunities in Indonesia, including those beyond Jakarta. The Kendal Industrial Park near Semarang is a good example of how a commercial collaboration between companies from both countries can help promote industrial growth and attract greater infrastructure development to the Central Java region.
11 Indonesia’s focus on developing new infrastructure and improving existing ones also creates opportunities for Singapore companies with relevant expertise in the utilities, communications, energy and transportation sectors. As Indonesia’s middle class grows, Singapore companies can find opportunities in services sectors such as tourism, healthcare and education.
Leveraging on the TACs and Internationalisation
12 Internationalisation will play an increasingly important role in companies’ growth strategies. It enables companies to expand their international footprint by venturing into new markets so as to gain economies of scale. This is necessary given Singapore’s small domestic market and the competitive economic landscape.
13 In this regard, Trade Associations and Chambers, such as SMF, have an important role to play, to help our companies internationalise and capitalise on overseas business opportunities. The TACs are key intermediaries for the business community as well as the go-between for companies and the government. They function as multipliers and facilitators for companies to build business networks, internationalise and to help navigate the operational challenges overseas. There is also potential for TACs to facilitate more commercial collaborations by matching business interests between companies and the needs in Indonesia. SMF, for example, frequently organises overseas business mission trips for its members to various parts of Indonesia to build contacts and obtain a first-hand understanding of the opportunities there.
14 The Singapore government is committed to support companies’ internationalisation efforts. IE Singapore has a network of over 35 overseas centres to assist Singapore companies in finding the right partners and provide business intelligence to help companies navigate the operating environment. Within Indonesia, IE Singapore has built strong relationships and networks with the provincial governments, state-owned enterprises and individual companies. It aims to create more opportunities for Singapore companies and enable them to go beyond Java Island to the other parts of Indonesia. IE Singapore will continue to match Singapore companies’ interests with the abundant opportunities in Indonesia.
15 Singapore and Indonesia have achieved much together within 50 years. Our excellent bilateral economic relations today are something we can be proud of. There is much potential for us to achieve even greater heights, and I look forward to seeing more successful business partnerships and collaborations between Singapore and Indonesia in the years to come.
16 I wish all of you an enriching and fruitful event. Thank you.