Interest in Indonesia is at a peak, Standard Chartered says

As developed nations suffer an economic slowdown, investor interest in fast-growing Asia, Indonesia in particular, are at the peak, global financial services giant Standard Chartered says.

Asia is expected to grow by an average of more than 7 percent in 2011 after growing by 8.1 percent in 2010, while the United States and the Europe have never grown beyond 4 percent to 4.5 percent. Indonesia is poised at a 6 to 7 percent economic growth trajectory.

That illustration has drawn the interest of foreign investors, as “even in slow times, we are growing at two times more than what the Western world grew at its peak,” Standard Chartered Asia’s executive director and CEO Jaspal Bindra said in an interview with The Jakarta Post on the sidelines of the recent World Economic Forum on East Asia. In the interview, Bindra seemed to be bullish about Asia and Indonesia, but he did note several overshadowing challenges. Here are the excerpts:

Question: Standard Chartered has a strong presence in Asia. How are your clients seeing Indonesia as an investment destination?

Answer: The level of interest that we’re getting from international clients is huge. The buzz around Indonesia is very strong. We have a strong clientele here in Indonesia. They are even more confident than we’ve seen many times before, because they’re sitting on a track record. They are now seeing things have worked here much more differently. Our clients from outside of Indonesia are coming here by the hose. Many of them come to meet with the team here because they all want to understand; they want to be helped and assisted.

Today, it’s more than ever. Indonesia has become very well known around the world in recent years by joining the G20. Some of these customers of ours in other countries are saying, for the first time, we need to go and take a look at Indonesia. Resources and natural minerals are a great opportunity.

We heard from the President yesterday and Gita Wirjawan [chairman of the Investment Coordinating Board] and anyone else that we are meeting here, that it seems like there’s a very good plan. There is huge political determination. There are some genuine challenges around how these things are going to be achieved. If you have a good plan and you have determination, that’s already quite encouraging.

Indonesia, however, faces threats of economic slow down in line with other Asian economies which may face a slide in demand from the developed countries with troubles in the United States and European countries, and now Japan. How do you see that affecting the growth of Asian economies that may affect investment opportunities?

Clearly, the Asian economies, many of whom are predominantly export oriented, are having to face a challenge because of the drying demand in the Western market, particularly the European bloc and the US. But having said that, just to see from the silver lining perspective, the demographics dictate that there is a huge market in the emerging market.

Asia is more than two-fifths of the world’s population and clearly that is a very important base. And maybe this will allow the opportunity for the manufacturing companies to spend a bit more effort in growing and developing the Asian market to be able to substitute some of the demand that is being lost in the US and the Europe.

That takes time and effort, but overall I think we will have a larger market at home to deal with. Clearly, the slowdown in the US and the Europe has been there for over three years now and we’ve been settled living with that, but more recently, there have been some factors than Asia itself such as inflation, which are making it slightly more difficult to grow at the same rate.

Take Asia in 2010, it grew by 8.1 percent as an average for the full Asian continent. It’s expected to grow closer to 7 percent in 2011. But it’s all relative.

At peak, the US and Europe have never grown beyond 4 to 4.5 percent. So even at the slow time, we are growing at two times more than what the Western world grew at its peak. So clearly, there is going to be a conversion at some stage where the Asian economies are going to get stronger, relatively.

We are better. It could be good, or better, but we’re definitely in a relative stance; much better than the developed world. With emerging markets, Asia predominantly, because of China, because of India, because of Korea, it’s got Indonesia.