Cutting beaurocratic red tape has been marked as a priority area by foreign investors interested in Indonesia. President Susilo Bambang Yudhyono was in Malaysia and Singapore this week talking up the benefits of his country as an investment destination. Indonesia has unveiled plans for massive infrastructure improvements and it needs millions of jobs for the ranks of unemployed. Foreign investment is showing signs of picking up following last year's peaceful elections coupled with SBY's business-friendly image.
Presenter/Interviewer: Finance Correspondent Karon Snowdon.
Speakers: Dato Mohammad Izat Emir, President of the Malay Malaysian Businessman and Industrialists Association; Regional Economist with GK Goh Investment in Singapore, Song Sen Wun; Alex Chen deputy Executive Chairman of Metro Kajang Holdings.
Snowdown: President Susilo Bambang Yudhoyono's first stop was Malaysia, where talking up investment needed less tricky diplomacy than the sensitive issue of the hundreds of thousands of illegal Indonesian workers there facing expulsion.
Malaysian business groups say its a good time to consider investing in Indonesia.
Dato Mohammad Izat Emir, President of the Malay Malaysian Businessman and Industrialists Association, has two cardboard factories in the country and is planning more investments. He says President Yudhoyono is well regarded.
Emir: We're extremely impressed with his speech, his very up to date understanding of the situation both in Indonesia and Malaysia. And he's very blunt and his ambition of his realisation in areas that concern business people, such as transparency, corporate governance.
Snowdown: The climate is improving economically as well as politically.
According to just released figures, the economy grew a better than expected 5-point-one per cent in 2004 and was especially strong in the last quarter, expanding by 6-point-7 per cent. Regional Economist with GK Goh Investment in Singapore, Song Sen Wun forecasts stronger growth next year.
Song: Looking at the trend and looking at the confidence that we're seeing in Indonesia which we haven't seen for several years there's reason to believe that Indonesia will probably end up with growth that will be higher than 2004, we're looking at about six per cent growth, again driven by private consumption.
Snowdown: So its a good time for President Susilo Bambang Yudhoyono to be on his investment drive as he's been doing this week in Malaysia and Singapore. How's he been received in Sinagpore?
Song: Certainly very well, I mean he gave a public lecture and there was a huge turnout including the entire Singapore Government Cabinet. He did quite well out of it and I think everybody appears to be quite willing to go into Indonesia particularly at this point when there's quite a bit of potential for private consumption to drive growth.
Snowdown: Malaysian businessman, Alex Chen is considering investing in Indonesia for the first time in infrastructure and plantations. He's deputy Executive Chairman of property developer and construction company, Metro Kajang Holdings.
Chen: I would consider investing in Indonesia because Indonesia is our nearest neighbour. We hope our neighbour's economy will improve. Also there are many areas of business in which Malaysia and Indonesia can cooperate and compliment each other.
Snowdown: As for problems, Alex Chen says there's still lots of Indonesian red tape to be cut. And I asked if Chinese Malaysians hold any concerns over Indonesia's reputation at some times in its past for anti-Chinese sentiment.
Chen: Of course there are some businessmen concerned about uncertainties in the past. But now we should look forward that overall investment atmosphere will improve, then the businessman will come to Indonesia.
Snowdown: Indonesia's plans for major road building projects will particularly interest Malaysian companies. In addition to improving the legal system, investors want land acquisition made easier and development leases extended. Dato Mohammad says President Yudhoyono promised to look into it.
Emir: To do this we need to acquire certain properties that belong to the villages along the highway. And in the past it has been very difficult now he assured us its going to be easy, smooth and practical. And he said he realised Indonesia needs a lot of investment and they are prepared to humble themselves and declared that they have a lot to learn and they want to go in that direction.
Snowdown: This will be politically sensitive in Indonesia, especially the issue of land acquisition, and present another challenge for President Yudhoyono who's promised to deliver economic growth and jobs consistent with the people's expectation of enhanced democracy.