Posted on 12 Feb 2015
[PICTURE1]
As many as 16 South Korean companies
have expressed a serious commitment to spend up to US$17.1 billion in a wide
array of sectors from power generation to minerals processing in Indonesia, the
Investment Coordinating Board (BKPM) said.
About $8.5 billion of the planned investments, which were registered at the
BKPM between October last year and January this year, come from five firms,
which would use the funds to manufacture import-substitution products,
according to data.
One firm is investing $2.7 billion to build a mineral proccessing facility.
Other investment plans will involve power generation, labor-intensive
industries, agro-commodity processing, maritime and infrastructure, all of
which are priority sectors envisioned by the investment body.
BKPM chief Franky Sibarani said Wednesday that most of the investors already
secured principal permits — initial licenses to set up businesses in Indonesia
— and continued with other steps to finally realize the investment.
“I am sure that realized investment will rebound this year,” Franky told
reporters after opening a CEO gathering that hosted about 200 business
executives from Korea. Franky said many Korean companies had delayed their
investment plans last year as a result of a deadlock on the two countries’
trade and investment negotiations. Normally, a committed investment can take a
few years to be realized. After obtaining principal business permits, investors
should get permanent business licenses in order to kick off their projects. The
investment body recently launched its one-stop integrated licensing services to
help cut procedures and costs to get all the business permits. Realized
investment from Korea slowed to $1.13 billion last year, down by half from
$2.21 billion in 2013. With the lowered investment, the country exited from the
top five foreign spenders in Southeast Asia’s largest economy.
In the energy sector, Korea Electric Power Corporation was interested in
building a power plant with an Indonesian partner through a joint venture,
according to Korean Ambassador to Indonesia Taiyoung Cho.
To help boost bilateral trade between both countries, South Korea and Indonesia
would resume talks on a comprehensive economic partnership agreement (CEPA),
Cho said.
“We proposed that we resume the discussions on CEPA and the Indonesian
government accepted our proposal in last December. Now the Indonesian
government is thinking about ways to resume and how to position itself,” Cho
said.
The negotiations for the deal began in July 2012, but was stalled mid last year
as both parties disagreed over the guarantee of direct investment from Korea
and access for Indonesian exporters to the East Asian nation’s agriculture
market.
Cho further said the Korean government could not guarantee investment from
Korean firms to Indonesia as the decision would be up to the decision of the
private sector.
“In a market economy, no government can guarantee that private business firms
will make investments. My point is that we develop many more ways to encourage
investment in Indonesia,” he explained.
Indonesia’s exports to Korea declined by 6.9 percent to $9.77 billion in the
January-November period last year from 2013, while imports rose slightly by
0.25 percent to $10.63 billion, resulting in a $862.95 million deficit.
Outbound shipments are mainly comprised of liquefied natural gas, bituminous
coal, crude oil and natural gas, rubber and copper ore, while imports are made
up of diesel, gasoline, textile, steel and synthetic rubber.
