US-S’pore pact may benefit Jakarta
Singapore has proposed extending the free-trade agreement (FTA) being negotiated with the United States to Indonesia to help develop its manufacturing base and attract investment.
Bintan could be a “prototype” before the idea is “replicated” elsewhere in the country, visiting Trade and Industry Minister George Yeo said here yesterday.
He said President Megawati Sukarnoputri thought the proposal worth pursuing.
Singapore and Washington were keen to help Indonesia develop its IT manufacturing base, said BG (NS) Yeo, who arrived here on Monday for a five-day visit.
Through the US-Singapore agreement, Indonesian IT products would be subject to simplified rules and duty-free access to the US market.
“This will be very helpful and get not only American investors, but all investors, to view Indonesia as a manufacturing base for IT components. And at 10,000 rupiah to the US dollar, Indonesia is very competitive,” he said.
BG Yeo said he discussed the idea with American Trade Representative Robert Zoellick and his Indonesian counterpart Rini Suwandi.
Ms Rini, he added, suggested using Bintan as a “small experiment”, creating an area with a “special administration” that would be attractive to foreign investors.
“The agreement will not be confined to any particular location in Indonesia and South-east Asia. It is a general arrangement. But we need a prototype to operationalise it and Ibu Rini has proposed Bintan as a prototype.”
Observers said Bintan stood to benefit from increasing investment and jobs.
The latest initiative underscores Singapore’s role in bringing capital to Indonesia.
The idea is that the arrangement with the US and other countries would help extend the benefits to the region, particularly Indonesia.
Singapore has been pursuing free-trade agreements to strengthen economic and trade links. FTAs allow lowered or scrapped tariffs and enhance trade.
It has deals with New Zealand, the European Free Trade Association and Japan, and is negotiating with Canada, Australia and the US.
BG Yeo said Singapore was also discussing with Tokyo the possibility of extending its FTA to Indonesia.
This would begin the “comprehensive economic partnership” with Asean, mooted by Japanese Prime Minister Junichiro Koizumi while in Singapore, he said.
He also made clear the need for a good basis for investments in Indonesia. “The key is that we must look after the needs of the investors. Above all, there must be law and order … This is a significant opportunity. And if we do it right and there is a follow through, it will be a positive signal to investors.”
BG Yeo delivers a keynote address at an Asean Free Trade Area seminar here today.
GIVING INDONESIA A BOOST
‘This will be very helpful and get not only American investors, but all investors, to view Indonesia as a manufacturing base for IT components. And at 10,000 rupiah to the US dollar, Indonesia is very competitive … ‘We must look after the needs of the investors. Above all, there must be law and order … This is a significant opportunity.’
– BG Yeo, on the US-Singapore agreement