UK trade and investment minister Lord Stephen Green recently visited Indonesia in April as part of the trade delegation led by British Prime Minister David Cameron. The visit underlined the UK’s commitment to building the two countries’ political and economic relationship. For both countries, this is an important relationship that could and should deliver more. “To this end, Cameron has set me the target of doubling trade by 2015. This will deliver real benefits to both Indonesia and to the UK,” Lord Green, the former chairman of HSBC, said in a written interview with The Jakarta Post’s reporter Linda Yulisman on the results of his visit. Below are excerpts of the interview.
Question: Is there any specific sector of interest in trade or investment from the UK to Indonesia?
Answer: Indonesia is a land of huge opportunities for UK companies. In particular, there is growing demand in the infrastructure, education, consumer goods, health care and financial services sectors. There are also significant opportunities in manufacturing as well as infrastructure, particularly roads, railways, ports, airports and power generation facilities.
What hurdles do UK firms find in trade relations with Indonesian counterparts, or in investment in Indonesia at present?
Many foreign investors, including those from the UK, would welcome greater legal and regulatory certainty and continued action to improve both the ease of doing business in Indonesia and the country’s infrastructure.
How should these problems be overcome to better enhance relations between the UK and Indonesia?
The UK and Indonesia have already taken concrete steps to address trade barriers. In 2011, for example, we established a framework for annual bilateral trade talks, and the first round of talks took place in November 2011. For both countries, the outcomes were positive and underlined our mutual commitment to promoting trade and investment. During our visit, the Prime Minister also announced the launch of a priority visa service in May for regular Indonesian business travelers to Britain.
We are committed to playing our part in successfully negotiating the EU-Indonesia Comprehensive Economic
Partnership Agreement. This will make bilateral trade easier and more profitable for all signatories.
Are there any new cooperative agreements set to be made during your current visit?
Yes, deals worth more than £326 million (US$526.36 million) were signed by British companies during the visit. EADS signed a deal worth £326 million for the sale of 11 Airbus A330 jets to Garuda Airlines. Monitise, a company specializing in mobile telephone banking and money transfers, announced a joint-venture with Indonesian company Astra-Graphia Information Technology. This deal is expected to create more than 350 jobs by 2015 and 250 of them would be in Indonesia. New Look announced it was expanding its international portfolio of stores into the Indonesian market. They currently have three stores and aspire to open five more before the end of this year. By 2014, they plan to have over 20 stores in Indonesia.
And an MOU was signed to enhance support to small- and medium-sized enterprises. The MOU, signed in partnership with the UK-ASEAN Business Council (UKABC) and The British Chamber of Commerce in Indonesia will give UK business access to a package of support, including office space, mentoring and access to networks when visiting the market.
What measures will you take to boost trade ties in Indonesia?
We are working constructively with the Indonesian government to address trade barriers. In addition, UK Trade & Investment is working closely with British and Indonesian businesses to make them aware of the many trade and investment opportunities that exist. For example, our ambassador [in Jakarta] will be visiting the UK in May and briefing UK companies on opportunities in Indonesia. And the London Chamber of Commerce and Industry last week led a delegation of UK companies to Jakarta to introduce them to Indonesian counterparts.
How do you see the prospects for the planned Comprehensive Economic Partnership between Indonesia and the European Union for the UK?
The proposed EU-Indonesia Comprehensive Economic Partnership Agreement will remove many of the barriers to trade and investment. By making trade and investment more straightforward, it would open up the EU, one of the world’s largest markets, to Indonesian businesses. It would also encourage EU companies to invest in Indonesia.
Is there a specific bilateral trade target, particularly your exports, set this year or in the next few years?
In 2010, the UK exported about £750 million of goods and services to Indonesia. The aim is to double this by 2015 as part of an overall doubling of bilateral trade, from £2.2 billion to £4.4 billion.
Indonesia’s government is revising its negative investment list. What sectors do you expect to be more open for foreign investors?
We hope to see fewer restrictions in a number of areas, but we are particularly keen to see the removal of the cap on foreign direct investment in the pharmaceutical sector.
How do you see the prospect of investing in Indonesia at present (compared to in the past)? In what sectors, UK companies want to invest in Indonesia in the near future?
In the past 13 years, Indonesia has become a much more attractive investment destination for British businesses. This is reflected in the fact that the UK is the sixth largest investor in Indonesia. We have a particularly strong presence in the oil and gas and financial services sectors.
British companies are particularly interested in the consumer goods, education, health care, manufacturing, infrastructure and financial services sectors.
I’d also like to add that Indonesian companies with global aspirations should consider trading with the UK. Indeed, last year Indonesian businesses exported goods worth £1.3 billion to the UK but there is scope to increase this dramatically.