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Indonesia, UAE look to cooperate
Indonesia and the United Arab Emirates (UAE) are mulling a cooperation framework that is expected to facilitate investment between the two countries, which remains relatively small despite the significant potential and enthusiasm reflected by investors from both countries
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ndonesia and the United Arab Emirates (UAE) are mulling a cooperation framework that is expected to facilitate investment between the two countries, which remains relatively small despite the significant potential and enthusiasm reflected by investors from both countries.
Speaking to reporters on the sidelines of the Annual Investment Summit 2014 in Dubai last week, Indonesia Investment Coordinating Board (BKPM) chairman Mahendra Siregar said he had spoken with UAE Economic Minister Sultan bin Saeed Al Mansouri and had agreed on the importance of an agreement to provide potential investors from both countries with a more rigid framework to mutually invest.
'We have agreed to formulate a framework that will both encapsulate a general investment mechanism and specific sectors to be developed. It will provide details such us possible projects and funding, accommodation to related parties and regulation,' Mahendra said.
He said he hoped to finalize the draft in the coming weeks.
'It's inevitable that they [the UAE] will invest [in Indonesia], with our growing economy and enormous population. The UAE, on the other hand, is important for us not only for its availability of funds but also its strategic position for African, Middle Eastern and European countries,' he said.
Despite having one of the world's largest sovereign wealth funds, Mahendra said investment from the Middle Eastern country in Indonesia was still relatively small, seeing insignificant or even no growth year by year.
According to data provided by the BKPM, US$68.4 million has been invested by UAE investors in Indonesia from 2010 to 2013. The UAE is ranked as Indonesia's 27th investor according to the total value of investment in this period.
There are 16 companies in Indonesia operating with investment from the Middle Eastern country, the largest being palm oil plantation company Inti Agro Makmur with a total investment standing at $45 million or about 66 percent of the total figure.
Oil and gas mining service companies Russian Oilwell Systems and Uletbulu Mining follow suit as the largest recipients with $7.7 million and $5.4 million respectively.
'Enthusiasm is high,' Mahendra said on the UAE's interests to invest in Indonesia. However, investors often felt 'unwelcome' due to Indonesia's regulatory barriers, he added.
Cargo Airline Maximus Air is one UAE company that has had to halt its investment plans, despite it having conducted talks with national flag carrier Garuda Indonesia last year.
'We were unfortunate to form a business due to the rule in Indonesia, which does not allow a foreign airline operator to operate in Indonesia,' said Saeed Salim, an advisor for Maximus.
Indonesian Ambassador to the UAE Salman Al Farisi said three Indonesian companies ' operating in the information technology, banking, and food sectors ' had stated their intention to rent areas in the UAE's industrial estates.
Among the UAE investors to soon enter Indonesia, he explained, was the Lulu Group ' the country's largest hypermart chain that operates 166 stores worldwide.
