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ndonesia and Taiwan officiated on Wednesday a business council that will help tighten links between businesspeople from the two nations, an effort that may ease the flow of investment from the East Asian economy into Southeast Asia'€™s top economy.

The director of the economic division at the Taipei Economic and Trade Office (TETO) in Indonesia, YC Tsai, said that the council would facilitate investment from Taiwanese firms into Indonesia by providing necessary information on doing business in the country as well as setting up contacts with local businesspeople as potential partners.

'€œTaiwan businessmen need more chances to have contact with local businessmen. They also need to build partnerships with Indonesian business groups like Apindo [the Indonesian Employers'€™ Association] and Kadin [the Indonesian Chamber of Commerce and Industry],'€ he said.

The council will be chaired by Setyono Djuandi Darmono, the president director of PT Jababeka, and will have four deputy chairmen representing Indonesian and Taiwan businesses.

The establishment of the council in Indonesia follows a similar step taken in Taiwan with the recent foundation of the Taiwan-Indonesia Business Council, which is based in Taipei.

Tsai further said that as Taiwanese firms were eager to expand aggressively in Indonesia and gain sufficient knowledge on the market, government policies affecting business and appropriate business partners were key to doing that, will all functions to be met by both councils.

Within the five-year period ending last year, Taiwan had been the 12th biggest foreign investors in Indonesia, spending US$1.45 billion, according to data from Indonesia'€™s Investment Coordinating Board (BKPM).

Some of the benchmark projects included manufacturing facilities built by e-United Steel, Maxxis Tires and Kenda Tires.

Kristy Hsu, the program director for the Taiwan ASEAN Studies Center at the Chung-Hua Institution for Economic Research, said that Taiwanese firms were now either considering or adopting the so-called '€œASEAN strategy'€, which puts a focus on expansion in Southeast Asia as the investment climate in China is less favorable than it was in the past.

Indonesia is one of the most favorable destinations for Taiwanese firms. It is competing with the Philippines and Vietnam. However, a number of obstacles ranging from poor infrastructure to a weak manufacturing industry structure must be addressed to win, according to Hsu.

Hsu suggested that one of the solutions to create more a conducive business climate was to seal an economic cooperation agreement (ECA), which would significantly lower import duties and give preferential treatment for foreign direct investment.