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Jakarta Post

India eyes investments in Indonesia’s infrastructure, health industries

  • Rachmadea Aisyah

    The Jakarta Post

Jakarta   /   Tue, March 26, 2019   /   02:35 am
India eyes investments in Indonesia’s infrastructure, health industries Transportation Minister Budi Karya Sumadi (left), Indian Ambassador to Indonesia Pradeep K. Rawat (center) and Coordinating Maritime Affairs Minister Luhut Pandjaitan pose for a photograph during the first India-Indonesia Infrastructure Forum (IIIF) in Jakarta last year. (Courtesy of/The Embassy of India)

Indian businesses are looking to participate in various sectors within the infrastructure and health industries in Indonesia, as investment from India to Indonesia has been growing in recent years, an ambassador has said.

Indian Ambassador to Indonesia Pradeep Kumar Rawat said the two countries were recognized as emerging large economies globally and had similar challenges and opportunities, with both having an infrastructure gap.  

On the sidelines of the second India-Indonesia Infrastructure Forum (IIIF) in Jakarta recently, Rawat told The Jakarta Post that Indian investors were interested in roadwork, urban railways, oil and gas, airports and the health industry.

“These are the areas where Indian businesses could become beneficiaries in arrangements with the Indonesian companies,” he said.

With Jakarta’s newly launched MRT, for example, Indian companies could share their expertise as India had built the cheapest metro projects in the world with highly competitive fares, Rawat said.

“Some of the things we have achieved could become good starting points for our friends in Indonesia. Our engineers can offer cost-effective construction, which can certainly reduce costs and meet far more competitive price points,” he added.

The South Asian country is among the largest economies in the world and third-biggest in Asia after China and Japan. However, its presence in Indonesia is not as big as its presence in China and Japan.

Data from the Investment Coordinating Board (BKPM) show that India’s investment in Indonesia amounted to $82.12 million in 2018, far lower than the 2017 figure of $286.6 million.

Between 2014 and 2018, the country’s investment in Indonesia totaled $518 million. In this same period, the top five foreign investors in Indonesia, including in infrastructure building, were all from East and Southeast Asia, such as Singapore, Japan and China.

Nevertheless, Rawat emphasized that having competitors in terms of investing abroad had never been a problem to Indian businesses.

“Competition is always a good thing [...] Indian companies are used to competing with foreign companies in India, and as a result Indian companies are now very successful abroad,” he said.

Also on the same occasion, Coordinating Maritime Affairs Minister Luhut Pandjaitan said the government was looking forward to learning more from India about various technologies used in waste management and health care.

“Furthermore, India is leaning strong toward information technology and we would like to see their products be introduced here,” he said. “Let's hope that the next step of our 70 years of cooperation will be people-oriented development.”

BKPM deputy chairman for investment planning Ikmal Lukman said the majority of India’s investments were still in wood products, trade businesses, food manufacturing and textiles.

“However, most of the investments are far too concentrated on Java Island, so we encourage [Indian] investors to invest outside of Java because there is a lot of potential for development elsewhere,” Ikmal said in the forum.

Private-backed Confederation of Indian Industry (CII) stated its plan to open an overseas office in Jakarta in May amid a growing interest among its members to partner with Indonesia.

“Our basic agenda would be to understand the local regulations and local laws, to access the government here and to see how the Indian industries can enter here,” Sujata Sudarshan, CII’s designated chief representative for the Jakarta office, told the Post on the sidelines of the forum.

One of the issues to be addressed by the CII’s Jakarta branch is the hassle Indians face in obtaining Indonesian work visas and permits, she said.

“Back then, the Indonesian Embassy in India could do the visa stamping, but what I understand now is that [the embassy] is no longer one of the 22 embassies where the [Indonesian] government can issue [work] visas,” Sudarshan said.

“That is a business constraint because we have to go to countries like Singapore to get the stamp [...] It is also a problem in terms of cost implications and travel time.”

She said the CII had raised the issue at the Indian Embassy in Jakarta, hoping that it could be resolved soon as it would greatly encourage more investment to Indonesia.