TheJakartaPost
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Indonesia still very much open for business
The present thinking might be that Indonesia is no longer looking like the land of milk and honey it once was
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The present thinking might be that Indonesia is no longer looking like the land of milk and honey it once was.
True, there is a real growing concern over policy changes that could impact Malaysian parties who have invested in industries such as banking and plantations.
Clearly, there's a growing 'economic nationalism' taking place, changing the investment landscape: no longer does Indonesia want to be seen as a country to be cherry-picked by miners, planters and even bankers.
These are industries that directly touch the lives of Indonesians, and so, it is understandable why they are clamouring back ownership.
No denying as well that Indonesia will continue to be tricky terrain for investors.
Land ownership will likely be a major challenge for investors taking up the call by Indonesian president-elect Joko Widodo for foreigners to invest in his country's manufacturing, tourism and infrastructure sectors, for example.
Indonesia is in a hurry to grow into an economic powerhouse.
Visitors will testify that they can feel a certain vibrancy the moment they set foot in places like Jakarta, something that this writer can attest to as well.
The country has already made a lot of progress.
Take, for example, the way in which it has successfully restructured its ailing flag carrier Garuda Indonesia.
While Malaysia is grappling with the biggest crisis to have hit the already financially challenged Malaysia Airlines, Garuda Indonesia, under the leadership of investment banker Emirsyah Satar, began a turnaround back in 2005.
Emirsyah took it from the bottom list of regional airlines, following safety issues and heavy debts, into a successful carrier that was named in 2010 as the world's most improved airline by London-based consultancy Skytrax.
So, Malaysian businesses looking to Indonesia have to find new ways of investing there and take advantage of areas in which our neighbour is in need of our expertise.
Here are some examples:
- Indonesia has a stark absence of home-grown or government-owned investment funds.
Malaysia, on the other hand, is laden with government-linked investment companies, which have a long history of operating.
We should seek to export these structures and knowledge to Indonesia.
On this score, it is noteworthy that Malaysia's national oil company (NOC) Petroliam Nasional Bhd (Petronas) is being used as a case study by Indonesia's equivalent, Pertamina, to learn how the former has turned into a world-class NOC and, in particular, how Petronas is carrying out its programme for private companies to get involved in marginal oil fields.
- Property development is booming, as there's a growing need for low to medium-cost housing, especially on the outskirts of big cities like Jakarta. There is still a marked absence of high-rise developments, something that Malaysian property developers have much experience in.
- The consumer sector is also looking very appealing, more so following Indonesia's implementation of minimum wage rules that has boosted purchasing power in the country. It is also seeing a burgeoning middle class.
Lastly, investors need to find their right partner, a universally accepted principle when investing in new markets.
A number of foreign investors have got burnt while pursuing opportunities in Indonesia with the wrong partners.
One simple way of finding the right partner is by looking for a local business person who has already partnered successfully with big foreign names and who has a healthy track record of operating well with those foreign partners. (***)
