Come now, or be too late, India tells Indonesian investors
AnupamSrivastava, the managing director of investment promotion agency Invest India, said on Thursday that Indonesian firms lagged behind their Southeast Asian peers in seizing sizeable investment opportunities in the world’s second-most populous nation of 1.2 billion inhabitants.
“Indonesian companies need to take a hard look at the competitive Indian market now and understand that if they come too late, the market will be saturated with big players,” Srivastava told The Jakarta Post on the sidelines of the India-Indonesia Investment Roundtable in Jakarta.
The flow of foreign direct investment (FDI) would expand bilateral trade exponentially through the creation of additional production facilities in India, thus considerably affecting its ability to sell in the country, Srivastava further said.
“The current trade figure of almost US$20 billion will be easily increased to $50 billion or $70 billion if the investment of between $5 billion and $10 billion is made,” he noted.
Bilateral trade between Indonesia and India totaled $16.8 billion last year, down 4.85 per cent from a year earlier. Both countries have set a target of attaining $25 billion by 2015.
The Indian government offers a number of fiscal incentives to foreign investors including lower import duties on capital goods and technical equipment and import, lower corporate income tax, particularly for companies operating in economic zones as well as special incentives for manufacturing firms setting up facilities across different sectors in the country.
Indian investors have a strong presence in Indonesia across a wide array of sectors including automotive; banking; energy; food processing; infrastructure; mining; oil and gas; and textiles. Both countries have signed a number of deals that plan investment totaling $16 billion in Indonesia over the next few years. India’s FDI reached $78.1 million in 58 projects last year.
With a gross domestic product (GDP) of $1.9 trillion at current prices, India is now the world’s 10th largest economy. The 2012 AT Kearney FDI Confidence Index put India as the second most attractive destination for FDI.
Srivastava said that Indonesian firms could tap into a wide range of areas: infrastructure such as the construction of roads and ports; food processing such as for marine products, which Indonesian firms show expertise; processing of plantation commodities like palm oil refineries; or manufacturing of automobile components.
Indian Ambassador to Indonesia Gurjit Singh said that the total investment opportunity in infrastructure alone could top $1 trillion within the next few years. In addition, the huge market should also serve as a strong incentive to lure Indonesian investors.
“I think there is a lack of awareness about the opportunities and insufficient contact between Indian and Indonesian counterparts. That’s what we are trying to improve. When they understand each other, they will find the opportunities,” he told reporters.
At present, Indonesia’s investment only values at several hundred billion dollars, and is limited to the food processing sector, according to Singh.