Indonesian 'gold rush'

08:30, November 15, 2010      

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Buoyed by the business facilitation measures under the newly-established free trade agreement between China and its neighboring 10 Southeast Asia economies, investment by China's large companies in the region is on the upswing.

Among all the 10 Southeast Asia nations, Indonesia, the region's largest domestic market with 240 million people, is set to be the major "gold rush" destination for Chinese businesses striving for overseas expansion.

"Indonesia's investment environment is improving as China's participation in the country's infrastructure and energy sectors grows amid increasing mutual understanding between the two nations," said Zhu Deliang, deputy chief engineer of Shanghai Electric Power Generation Group.

Shanghai Electric, the country's top power equipment maker, tapped into the Indonesia market as early as 2007 with a coal-fired power plant worth $891 million with three generating units providing a capacity of 350 megawatts each in Indonesia's beach-resort town of Pelabuhan Ratu.

"The plant is expected to go into operation in 2011. Following the successful maiden investment in the country, we're now looking at more projects in the region," said Zhu.

China has emerged as Indonesia's third largest trade partner. During the first nine months of this year, China's trade volume with Indonesia was up 56 percent at $30.4 billion, according to statistics from China Customs. In 2009, China's direct investment in Indonesia grew 29 percent.

This year also marks the 60th anniversary of diplomacy between China and Indonesia.

"China is encouraging domestic firms to invest in Indonesia by actively participating in electricity, coal and gas-oil projects," said Zhang Guobao, vice-minister of the National Development and Reform Commission (NDRC).

With capital and policy support from the central government, China's State-owned firms have spearheaded investment in resources-rich Indonesia.

After pumping billions of US dollars into Indonesia, big Chinese firms, including China Huadian Corporation, Sinopec and CNOOC, are looking for more investment on the back of preferential polices to facilitate business between China and the Association of Southeast Asian Nations (ASEAN) members, of which Indonesia is one.

"Indonesia has become one of Chinese enterprises' main target investment countries overseas," said Wang Jinzhen, vice-chairman of the China Council for the Promotion of International Trade.

China's leading offshore oil maker CNOOC said its investment in Indonesia will top $5.6 billion by 2011, following its first project in the Strait of Malacca in 1994. China Huadian, one of the five largest power generators in China, also said that their bidding for a coal power plant project in Bali that will have three generating units with a capacity of 145 megawatts each, has passed a pre-qualification test.

China will provide capital and advanced manufacturing capabilities to support cooperation between Indonesia and China in the energy sector, NDRC's Zhang said.

As cooperation between the two nations gets deeper, Indonesia has also accelerated its improvements in its investment environment.

Boediono, vice-president of Indonesia, said over the last five years the Indonesian government has deepened reform to improve business and investment conditions, which in turn helped the country's economy to grow 5 percent in 2009. Boediono expects the nation's economy in 2010 will increase by 6 percent, while the growth rate during 2011 and 2015 will reach 7 to 8 percent.

Moreover, the two countries' leaders also said extensive cooperation in the renewable energy sector was of significance in maintaining healthy and sustainable growth on the back of global climate change challenges.

NDRC's Zhang stressed that collaborations in hydropower, wind power, solar power and nuclear power are critical.

"Although investment in Indonesia's clean energy is in its early days, we're here actively seeking possibilities to help build up nuclear power plants in Indonesia," said Wang Kai, international marketing manager of China Guangdong Nuclear Power Holding Co Ltd, one of the country's two nuclear-energy firms, when attending an energy forum in October.

"We hope the two nations' cooperation over clean energy will become a new spotlight in the future," Zhang said.

The China-ASEAN Free Trade Area was officially launched on Jan 1 with the aim of increasing commerce among the involved 10 nations from Southeast Asia and China.

Source:China Daily


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