Jakarta seeks Mid-East investments

S’PORE ALSO AT FORUM

Indonesia is turning to the Middle East as a new source of foreign investment to bail out the country’s battered economy.

A ministerial meeting on joint-investment began here yesterday with eight Gulf states taking part in an initiative which sources said could lead to a sizeable investment fund being set up to give Indonesia’s economic recovery a boost. Singapore, represented by Foreign Affairs Minister S. Jayakumar, along with Malaysia and Brunei – all countries closest to Indonesia – were also invited to the meeting.

Prof Jayakumar arrived yesterday at the invitation of his Indonesian counterpart Alwi Shihab.

He was accompanied by Minister of State (Trade and Industry) Lim Swee Say and officials from the Foreign and Trade and Industry ministries, Economic Development Board (EDB) and Trade Development Board (TDB).

Indonesian officials said Mr Alwi made the point that Singapore’s involvement in the forum was important because of international confidence in the Republic.

If Singapore showed interest in investing, then Bahrain, Iran, Kuwait, Oman, Qatar, Saudi Arabia, UAE and Yemen would have little hesitation putting their money in Indonesia.

Mr Johan Syahperi, director-general for Foreign Economic Relations told The Straits Times that the Singapore government, in particular, played a “catalytic role” in the recent sale of US$500 million (S$862 million) worth of Astra shares to Singapore car distributor Cycle & Carriage.

Indeed, the sale of several assets held by the Indonesian Bank Restructuring Agency (Ibra) would be a major focus of the two-day meeting.

Ibra is expected to make a pitch to the oil-rich states to buy some of these assets.

They would also be briefed on opportunities in banking, infrastructure, telecommunications, transportation and oil. A senior government official said President Abdurrahman Wahid mooted the idea for the meeting when he visited the Middle

East this year given that Indonesia needed wider sources of foreign assistance to help rebuild the economy.

Diplomatic sources said the move signaled a new direction in Jakarta’s foreign policy which, for over three decades, had remained anchored primarily on Asean and the Non Aligned Movement.

“We will continue paying attention to Western countries.

“But we also want to now turn to developing a new relationship with our brothers from the Middle East.” he said. “There is of course a sense of solidarity that we are Muslims,” Mr Johan added.

Indonesia was thus looking for direct investments from the Gulf states that had hitherto channeled investments through international or other agencies.

Jakarta was looking in particular to these countries to establish an investment fund.

He declined to reveal details of the fund but sources said that it would be substantial.

“Our attitude is not to miss any potential source of economic assistance,” he said.

“These countries are rich and money generated from their oil revenues can be used for investment abroad.”

Whatever agreement Jakarta forged with these countries could also use Singapore’s economic package for Indonesia as a possible model.

Prime Minister Goh Chok Tong had in January this year announced a four-point S$1.2 billion package to help Indonesia attract foreign investments.