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India, one of Asia’s rising powerhouses, is aiming to boost its investment to US$25 billion in Indonesia in the foreseeable future, particularly in support of a previous trade agreement between the nations, newly appointed Indian Ambassador to Indonesia Gurjit Singh says.
Last year, then trade minister Mari Elka Pangestu and Indian Commerce and Industry Minister Anand Sharma vowed to reach $25 billion in bilateral trade by 2015.
Area of investments that Indian businesspeople would be interested in included infrastructure, services, mineral processing and manufacturing, Gurjit said on Wednesday after the launch of India Business Forum in Jakarta.
“Trade can expand if there’s more investment in Indonesia because you have great capacity, a lot of resources, a lot of commitment and good policies. Much more can happen,” Gurjit told reporters.
Indian investment plans currently amounts to almost $18 billion, according to Singh. Last year, for example, Indian state-owned National Aluminium Company Ltd. (Nalco) signed a memorandum of understanding (MoU) with the East Kalimantan administration to build a $4 billion smelter in East Kutai with an annual production capacity of 500,000 and a 1,250-Megawatt power plant.
In January, executives from both nations inked 15 agreements in New Delhi, with Indian firms such as Adani Group, GVK Group, International Coal Ventures, Reliance and Tata Power, committing to invest $15.12 in Indonesia in areas such as infrastructure and transportation.
To help achieve the target, India would begin a first round of negotiations on the so-called Indonesia-India Comprehensive Economic Cooperation Agreement at the end of the year, Singh said.
The nations were also scheduled to sign a double-taxation avoidance agreement to ease investment flows, he added.
Trade Minister Gita Wirjawan, who is the former chief of the State Investment Coordinating Board (BKPM), said that the expected amount of investment would be feasible, due to the scale of the gross domestic products of both nations, which have been valued at more than $3 trillion.
“[Indian firms] can contribute not only in terms of investment scale, but also in terms of technology,” Gita said.
Investment was a two-way street, as India offered big opportunities for Indonesian firms to invest, the minister said. “I think we can make investments in industries similar to those that Indian firms have made [here], and in areas where they need financial capital.”
As Indonesia is building its processing industry, in the next few years, it will likely see its exports expand to products with added value besides palm oil and coal, which currently make up the largest part of the country’s exports to India, according to Gita.
Bilateral trade settled at $17.66 billion last year, with Indonesia exporting $13.34 billion and importing $4.32 billion.
Indonesian exports to India include palm oil and its derivatives, palm kernels, coal, briquettes, copper ore and copra, while its imports include petroleum oil, transmission applications for radio-telephony, trucks, and cyclic hydrocarbons.
Realized investment by Indian firms settled at $41.9 million last year, and $30.2 million in the first quarter of this year, according to the BKPM.