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Partners in creating growth and investment in SE Asia

I recently had the opportunity to join my colleagues, the US ambassadors to Singapore, Malaysia and Cambodia, on a tour organized by the US-ASEAN Business Council to Washington DC, Houston, Los Angeles and San Francisco

Robert O. Blake (The Jakarta Post)
Jakarta
Thu, October 23, 2014

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Partners in creating growth and investment in SE Asia

I

recently had the opportunity to join my colleagues, the US ambassadors to Singapore, Malaysia and Cambodia, on a tour organized by the US-ASEAN Business Council to Washington DC, Houston, Los Angeles and San Francisco. Throughout the tour, we briefed the American business community, think tanks, universities and local governments in these cities on why ASEAN countries are of growing economic and strategic importance to the United States.

Today the economies of the 10 ASEAN countries collectively represent Asia'€™s third-largest economy (and the world'€™s seventh largest) with a combined gross domestic product (GDP) of US$2.4 trillion and a consumer base of 626 million people. The ASEAN Economic Community (AEC), which is scheduled to come into force in December 2015, is expected to create the world'€™s fourth largest single market economy by 2020.

Other trends augur well for the future of the ASEAN market. A recent Asian Development Bank study found that by 2030, ASEAN'€™s middle class is expected to grow to 454 million people, more than 60 percent of the total population. In the same period, ASEAN'€™s GDP is expected to almost triple to more than $5.5 trillion. Small and medium-sized enterprises (SMEs), which comprise 96 percent of all businesses in the region, will have unprecedented growth opportunities in the AEC.

Member companies of the US-ASEAN Business Council are investing in this growth potential that will create jobs in the region and in the United States. Through a partnership with the US Agency for International Development, major American companies also are helping SMEs in the region boost their competitiveness and connect to regional and global supply chains.

In Indonesia, American foreign direct investment is creating demand for skilled labor, adding value to Indonesia'€™s natural resources and transferring global technologies to the local market.

For example, Arizona-based Fluidic Energy is delivering cutting-edge, environmentally friendly battery and energy storage solutions to customers in Indonesia and around the world from its $25 million manufacturing facility in Bogor. Caterpillar will employ more than 400 people at its new $150 million mining truck bed and chassis manufacturing facility in Batam, its second facility in Indonesia, which will serve its customers in Indonesia and the Asia-Pacific region.

Starting this year, Cargill will process Indonesian cocoa beans into powder and butter to supply regional markets at its new facility in Gresik, East Java, its first cocoa processing plant in Asia. And Honeywell employs more than 1,500 Indonesians, including at its Honeywell Aerospace plant in Bintan, where it produces avionics systems, communication and navigation equipment and other high-tech aircraft components for its global clients.

President Joko '€œJokowi'€ Widodo'€™s plans to boost Indonesia'€™s economic growth rates by redirecting energy subsidies to finance infrastructure development, education and skills development will give a further boost to companies that want to increase manufactured exports and create sustainable high wage jobs in Indonesia.

American companies with over $60 billion invested in Indonesia to date have an important stake in Indonesia'€™s success and attracting additional US investment will serve to further boost economic activity and provide jobs and opportunities for Indonesians.

American audiences were interested to hear of Indonesia'€™s growing strategic importance to the US. I highlighted the leading role Indonesia is playing within ASEAN to help forge a new Code of Conduct in the South China Sea; Indonesia'€™s hosting of the Bali Democracy Forum; the powerful example its tolerant open society represents in rejecting the misguided teachings of the Islamic State movement; Indonesia'€™s growing role in international peacekeeping operations; and the likelihood that President Jokowi will sustain these policies.

We see a strong and enduring role for ASEAN as a driver of economic growth and cooperation on a wide range of strategic and development priorities. The US and American companies welcome the opportunity to partner with Indonesia and with ASEAN to promote additional trade and investment and to work with Indonesia and other ASEAN member states as they strive to meet the needs of their people.

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The writer is the US Ambassador to Indonesia.

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