Kanya Stira Sjahrir & Antara
The Jakarta Globe
Indonesia expects neighbor Singapore to boost its investment in the country to capitalize on the conducive political climate and growing economy, a top minister said.
Investment from Singapore is expected to increase 50 percent this year, Coordinating Minister for the Economy Hatta Rajasa said.
He expressed his optimism after meeting on Tuesday with Lim Hng Kiang, Singapore’s Minister of Trade and Industry, in Jakarta.
“Having Singapore as an international financial hub will hopefully help promote investment opportunities in Indonesia to investors,” Hatta said on Tuesday.
Foreign direct investment from Singapore was valued at $5 billion last year.
Indonesia is struggling to attract more foreign investment to spur growth. President Susilo Bambang Yudhoyono had conveyed the same message to Singapore’s deputy prime minister, Teo Chee Hean, during a bilateral meeting in Bali last month.
Investment was one of the issues tackled by working group between the two countries in the framework of economic cooperation. Infrastructure, connectivity, ports and the manufacturing sector were also discussed.
“We have agreed to increase promotion of the region so it can become an investment destination.
This must become a success story,” Hatta said.
Juniman, chief economist at Bank Internasional Indonesia, said the nation was a prospective market for Singaporean investors because they needed to take their money somewhere else.
“It is hard for them to invest their money domestically in this current investment climate,” Juniman told the Jakarta Globe.
However, he also said the government must realize the actual source of the investments as many Indonesian entrepreneurs use Singapore as their home base to avoid higher taxes.
Discussions in the working group also covered development of air transportation, human resources and agribusiness in Batam, Bintan and Karimun, three islands near Singapore.
Hatta acknowledged that problems in licensing and customs need to be addressed prior to any development, but did not provide details.
Accroding to data from the Investment Coordinating Board (BKPM), the number of Singapore companies investing in Batam and the surrounding islands has increased 97 percent since Indonesia introduced a free-trade zone there in 2009.
Indonesia and Singapore have been among each other’s top five trading partners for many years, with strong bilateral investment and tourism cooperation given the proximity between the two nations.
Indonesia is the largest supplier of international tourists for Singapore, which has invested in Indonesian telecommunications, health care and service businesses.