Exclusive interview Ambassador of Indonesia
EMBASSY OF THE REPUBLIC OF INDONESIA
Exclusive interview Ambassador of Indonesia to Malta H.E. August Parengkuan for THE PROGRESS TIME
The friendly relationship in Italy began in 1949 and the exchange value between these two countries is 3,69 billion Euros. For this reason, today, many Italian companies are always more present on the Indonesian market. Regarding this matter, what is the new reform that your government is developing in order to promote investments?
For many years, Indonesia has been one of the largest recipients of foreign direct investment in the Southeast Asian Region. Global investors have worked in Indonesia for its conducive investment climate in which Indonesia has everything that attracts foreign investment such as rich natural resources, high-skilled labour forces, as well as political stability and legal certainty in foreign investment.
We are very aware that investment climate is something that needs to be improved continuously given the changing global environment. In the last 5 years, our world economy is not very favourable given the financial crisis in the some of the largest economy in the world. There are times when this situation leads to the movement of investment fund away from developing countries. Regionally, we have to take into consideration the ASEAN Economic Community that comes into force in 2015. At the same time, we want to accelerate our national economic development.
In this regard and in line with the commitment of the President Joko Widodo to continue reform, simplify the regulation and to open Indonesian economy, the Government has released 15 economic policies since September last year designed to boost economic growth. This economic policy also stipulates measures to ease doing business and investment in Indonesia. This has resulted in the improvement of business environment as reflected in the indicators of the World Bank’s Easy of Doing Business 2016. We have cut 50 procedures to start business as well as shortening the time and reducing the number of licences to start a business. The new policies also offer investors with more incentives in terms of simplified procedures in starting9 business, reduced tax and better investment guarantee.
In order to support this policy to promote more investment, our National Investment Board or BKPM is now providing investors with an End-to-End Services. BKPM facilitate the investors from the very beginning when they show interest to invest until the realization of investment. Our investment authority has improved their services by creating “One Stop Office Centre” which provides an integrated service for foreign investor in getting their licences and other registry to start an investment project.
Nowadays, the commercial exchange between Italy and Indonesia is mainly based on assets exportation (machines tools, general or special equipment). For 2017, which Italian sectors could find an open market in Indonesia?
The trade exchanges between our two countries continue to flourish and in fact, Italy is the third largest trading partner in European Union for Indonesia. I am fully aware that there is negative tendency of decreasing value in bilateral trade because of the unfavourable global economic and the weak demands of export commodities.
However, Italy and Indonesia have a lot to offer in terms of trade given the fact that both countries are part of the 20 largest economics in the world. Therefore, the value of bilateral trades of about US$ 3,69 Million in 2015 is not a true reflection of trade potential between our two countries. The private sectors in our two countries should take the benefit from the untapped trade opportunities from our bilateral relations.
Indonesian and Italy share the principle of open trade policy that promotes the international trade. In this regard, there is no specific restriction nor discrimination for any Italian product to enter Indonesian market. Therefore, Italian product can enter the Indonesian domestic market of more than 265 million people. This includes the growing middle class that hungry for a quality product from many parts of the world. Italian companies could benefit from the large domestic market of Indonesian which require high quality consumer goods. Furthermore, Italy should take advantage of Indonesian national development by being a partner in providing high-tech products in the sectors of aerospace and civil aviation, software development, machinery and industrial development, defence industry and many others opportunities.
In fact, Italian companies should be more active and expansionist towards Indonesian market as they are far left behind compare to those of French and Germany. For example, there are only about 82 Italian companies operating in Indonesia compare to 180 French companies and more that 300 companies from Germany.
Italian companies should also take the huge opportunities from the fact that Indonesia is part of the ASEAN Single Market of more than 600 million populations. I believe that Italian companies should consider seriously to invest and relocate their business operation in Indonesia in order to gain the competitive advantage in this global economy and benefit from the ASEAN Single Market.
Could you explain us purposes of the Master Plan for the Acceleration and Expansion of Indonesia’s Economic Development 2011–2025 (MP3EI), as realized by your Government? What Indonesia offers to Italian companies
We have the vision for the future of Indonesia as one of the world developed countries by 2015. This vision will be achieved trough a set of plan and priorities to accelerate the realization of Indonesia becoming a developed country under the framework of the Master Plan for Acceleration and Expansion of Indonesia’s Economic Development (abbreviated MP3EI) in the year of 2011-2025.
The current Government under the leadership of President Joko Widodo has set up 9 priority agenda or NAWACITA which later translated into “National Medium Term Development Plan (2015-2019)”. It emphasizes on national development that are inclusive, has value added of natural resources with the sustainable approach, as well quality of the environment and tackling climate change. It also promotes the interest of Indonesian to be a maritime fulcrum to fully benefit from the characteristic of Indonesian as archipelagic country. In order to achieve those priorities, the Government is accelerating infrastructure development and improving connectivity among region in Indonesian to boost its economic growth.
In this regard, I believe that the foreign investors including Italian ones should take the opportunity to participate in Indonesian infrastructure development. There are about 225 infrastructure projects worth of more than US$ 200 billion. Those projects are based on several sectors, included sea ports and airports development, energy, road and railways, industrial projects, power plants, housing, water supply and dams as well as information and communication technology. We also take regional approach of those projects to guarantee inclusiveness and that the fruits of development can benefit all Indonesian.
What long and medium term investments is your country planning, concerning high technology, renewable energy and environmental protection?
Technology, renewable energy and environment protection are all key factors in development. For many years, Indonesia has strived to build its economy based on the advanced technology in order to be competitive in this global economy. Therefore, we aim to incorporate the latest technology in every aspect of Indonesian development such as in infrastructure. In any case, we hope that foreign investor would be a real partners of development by bringing their advance technology to Indonesia.
Equally important is the commitment of the Government of Indonesia for the sustainable development with a view to balance our development goals with the sustaining our natural resources and ecosystem. Therefore, environment protection is always a prerequisite for every development project in Indonesia.
We also place a close attention to the deteriorating state of global energy supply and its environmental impact. In this context, we encourage development project in the sector of renewable energy. I am pleased to inform you that there are Italian companies that has gotten projects in renewable energy in Indonesia. I look forward for a closer cooperation with Italian partners which are the global leading player in the renewable energy.
Indonesia is a country with a huge architectural and natural heritage. What are the promotional strategies is your Embassy realizing with regard to the knowledge of your country in Italy?
I try not to be biased here, but I do have to say that Indonesia is indeed a beautiful country. With the size from the western part to the eastern one equals the distance between London and Moscow, it harbours many great attractions for visitors. From the lovely landscapes and countryside, wide varieties of interesting cultures, historical remnants, beautiful beaches, shopping destinations as well as nightlife, can be found in Indonesia.
Indonesia has gained the 50th rank in 2015 from the 70th position in 2013 according to The World Economic Forum’s Travel & Tourism Competitiveness Report, which “measures the set of factors and policies that enable the sustainable development of the Travel & Tourism sector, and in turn, contributes to the development and competitiveness of a country”. This achievement was abled by the rapidly growing number of foreign visitor arrivals in Indonesia, national prioritization of the tourism industry and investment in infrastructure. Based on the report, Indonesia has a competitive factors in price competitiveness, rich biodiversity and the presence of several heritage sites.
The tourism industry in Indonesia currently contributes for approximately four percent of the total economy. As for now, we are targeting that by 2019 this number will be doubled. To achieve this, the Government of Indonesia will focus on improving supporting infrastructure, accessibility as well as enhancing marketing campaigns abroad, especially in the main target countries.
The amount of tourists from Italy, however, still has rooms to be developed. Recently, during the visit of President Sergio Mattarella to Indonesia in November 2015, Indonesia and Italy have established several MoUs, and one of them is in Cultural and Tourism Cooperation. Within this platform, the two countries will advance the cooperation in tourism and cultural heritage marketing, research and development as well as dissemination of information and capacity building.
Responding to positive development in our bilateral relations, the Government of Indonesia has granted visa-free access to Indonesia for Italian citizen for a maximum period of stay 30 days. As the collateral effect, we hope these steps will contribute to the rise of visitors from Italy.
As part of our integrated promotional strategies throughout the world, we have been enhancing the “Wonderful Indonesia” campaign. While considering the potential market in as well as characteristics of Italy, we aim to be the main destination of tourism and trade in Southeast Asia. This has been done through outdoor media, such as on the body and inner decorations of buses that passing through main streets and city centre of Rome and Milan.
We are also actively participating in art and culture festivals throughout Italy, such as Venice Art Biennale and Festival dell’Oriente in several big cities in Italy. We recognize the high level of appreciation of the people of Italy towards arts and culture and we are aware with our capacity in this field. We also recognize the notable trait of Italy as the Mecca of the fashion industry. While realizing that we have overlooked potential in fashion and textile industry, we have been actively promoting Indonesia’s talents as well as textile richness and quality to match the demand of the Italian mode practitioners.