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Indonesia, India in 'new frontier' of bilateral ties
Publication Date : 25-10-2012
Diversification in trade and cross investments are part of the opportunities worth working out in the "next frontier" of bilateral ties between Indonesia and India, an international seminar in Jakarta concluded yesterday.
"We export more to India, so there is nothing wrong if our companies invest in India," Indonesia's Deputy Finance Minister Mahendra Siregar told the Asean-India Business Seminar for Progress and Prosperity at the Four Seasons Hotel.
Echoing a similar view, Indian Ambassador to Indonesia Gurjit Singh said that trade between Indonesia and India was booming in recent years, but the "next frontier" would be increasing investments in both countries.
"The challenge now is to look at investment being the next frontier and to see how trade can be diversified by having cross investments," Singh said. "Increased investment will lead to more spin-offs, resulting in more trade."
The one-day seminar was held to commemorate 20 years of relations between India and the 10-member Association of Southeast Asian Nations (Asean).
Ever since the pronouncement of India's historic Look East Policy in 1991, Singh said, relations between the South Asian giant and Asean progressed steadily.
In 2009, India signed the Asean-India Free Trade Agreement in Goods. Just two years later its trade with Asean countries reached almost US$80 billion — $36.74 billion in exports and $42.52 billion in imports — a 29 per cent increase compared to 2010. Indonesia is India's second biggest trading partner in Asean.
According to Indian data, bilateral trade touched a historic $20 billion mark in 2011, a huge increase from a mere $3.93 billion in 2005. Indonesia's Central Statistics Agency valued bilateral trade slightly lower at $17.65 billion — $13.33 billion in Indonesian exports and $4.32 billion in imports for 2011. In the first seven months of this year, trade between the two countries almost reached $10 billion. It may easily top $25 billion before 2015.
India is the biggest buyer of Indonesia's prime products: palm oil, coal and rubber.
However, it is a different situation when it comes to investments, which are on the rise in recent years. According to India's Commerce Ministry, Asean countries led by Singapore and Malaysia, invested some $60 billion from April 2000 and July 2012, while Indian companies invested about $20 billion in Southeast Asian countries during the same period.
Of late, Indian companies have been aggressively looking at Indonesia, the biggest economy in Southeast Asia, and eying promising prospects in the mining, oil and gas, iron and steel, automotive, banking, insurance sectors in addition to a number of infrastructure projects. According to Indonesia's Investment Coordinating Board, realised foreign direct investment from India was $75.22 million in the first six months of this year, a big leap from $41.9 million for the entirety of 2011.
Indian companies hope to invest as much as $15 billion in various Indonesian projects in the coming years.