Kalla on Investment

Sep 25th, 2006, in Business & Economy, by

An interview with vice president Jusuf Kalla as he discusses the investment climate in Indonesia.

Vice President Jusuf Kalla is embarking on a business tour of the U.S., Spain and Saudi Arabia from September 22nd to October 4th. This interview was given one day before his departure.

What is the main purpose of this visit?

The trip to the U.S. will primarily focus on economic issues. And honestly, we don’t have any political disputes with the U.S., in fact, we are on very good political terms. American investments are very important. I believe the potential is high in developing a stronger economic partnership with a strong nation like it. The potential is positive.

What is really the importance of bilateral relations with the United States?

Our relationship with the U.S. is very strong and important to us. Due to our previous discussions and enhancement efforts, the military embargo has been waived. The Timika case was also settled. Now, we have a better relationship with them.

Based on the itinerary, this trip focuses more on economic relations than political aspects. Can you please explain why?

It is important we retain the existing American investments and, more importantly, we are considering expanding them as a way of honoring the relationship.

The interest is in the energy and financial sectors, and we are also looking for investments in the manufacturing sector. Hence our important meetings in Washington, New York and Chicago are with U.S. business corporations. It is important we positively share our economic vision with them, convince our potential investors in those three cities. We want to show them that we are serious and want mutual benefits for all of us.

But Indonesia seems to fail in attracting foreign direct investments (FDI) from the U.S. compared to our neighboring countries. Why is this so?

Not exactly so. If the failure is in the amount of investments compared to other countries, yes. But if the failure is in not investing in the country, no. If you carefully look at the statistics of foreign investments, you will notice an increase.

But there is no long term continuity and sustainability of these investments.

Exactly! Others see Indonesia as one of the most corrupt countries and think the country is not safe due to terrorism. But this has somewhat improved. So, it remains very important for us to meet them, talk to them, and that is when we can rebuild our image and change their perception.

What can the Indonesian government and businesses do to attract foreign investment?

The most important thing is to improve our domestic situation. Then we must be able to build their trust through our achievements. And in my opinion, this is not difficult to achieve. But we also have to listen to them, learn from them, about their concerns toward us. What are their exact setbacks that makes it difficult for them to invest, and we must do that through one-on-one talks. Excessive tax reforms, corruption, bureaucracy, labor are included in their list of concerns, in my humble opinion. And these are the areas that we need to improve.

Foreign investors have some problems with the status of their contracts here. For instance, Cemex and ExxonMobil had some legal problems. How do you convince American investors?

I do not see any complexity here. Exxon’s Cepu project is clear and finalized, and this was not a matter of sanctity, but a matter of the government not initiating talks with them. The Cemex case is merely a normal business dispute, and the reason why they pulled out is because they wanted to make a larger investment elsewhere. And I believe it is not related to legal affairs.

Lastly, what would you expect from the international community?

First of all, I want to encourage the international community to look at the current Indonesia, and not perceive us from our past.

Second, see us as a nation seeking strong economic ties with all parties. Almost all foreign companies operated in Indonesia have benefited, especially American companies.

Our nation is safe and secure, we are getting much better now. So, I see no worries to come to Indonesia. Finally, I want to encourage all potential parties to invest in Indonesia.

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