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JAKARTA: Indonesia expects the Bilateral Investment Treaty (BIT) with Singapore to boost two-way investment by 18-22% over the next five years, Foreign Minister Retno Marsudi said on Tuesday (March 9).
The treaty, which came into force on Tuesday after the two sides exchanged instruments of ratification, would also serve as an important step for Singapore and Indonesia to accelerate economic recovery after COVID-19, he added.
During an online meeting with Singaporean Trade and Industry Minister Chan Chun Sing to mark the occasion, Mdm Marsudi said the treaty is an important milestone for bilateral relations.
“Singapore is an important trade and investment partner for Indonesia and I believe it will continue to be so for many years to come,” he said.
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According to the Indonesian Investment Coordinating Board, Singapore was Indonesia’s largest foreign investor last year, with a total investment worth $ 9.8 billion. This figure was a significant increase over the previous year, when Singapore’s investment in the country was 6.5 billion dollars.
Mdm Marsudi noted that Singapore’s investment in Indonesia had risen 6.5% year-on-year even before the treaty went into effect.
“In this current difficult situation, the ratification of the BIT serves as an important economic boost to accelerate the economic recovery in our two countries. It could potentially improve two-way investment ranging from 18% to 22% over the next five years, “he said, adding that this would translate to around US $ 200 billion in investments per year in the region by 2030.
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The Indonesian minister said Tuesday that the treaty provides more certainty and confidence, as it provides more legal protection to Indonesian and Singaporean investors in both countries.
“This BIT reflects the strong commitment of Indonesia and Singapore to open and fair economic cooperation, indicating strengthened hope and optimism to continue exploring business opportunities that benefit us all,” he added.
The treaty with Singapore is the first BIT to come into force after years of review of the investment treaty by the Indonesian government, the minister said.
The BIT was first signed in October 2018. The last major hurdle for the treaty to enter into force was overcome on September 25, 2020 when Indonesian President Joko Widodo ratified the agreement.
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For his part, Mr. Chan noted that Indonesia has been an attractive investment destination for Singaporean companies.
Minister of Commerce and Industry giving his keynote address on October 26, 2020 at Singapore International Energy Week 2020. (Photo: Energy Market Authority)
“The BIT will further boost Indonesia’s attractiveness to Singaporean companies. We hope that we can continue to be the largest investor for many more years and we hope that investment can continue to grow more and more, ”he said.
“The entry into force of this BIT, even in the midst of the COVID-19 pandemic, will undoubtedly strengthen this partnership and send an important signal to both countries and other partners in the region of our firm commitment to continue growing this relationship. “.
Chan said Singapore companies have been among the first to invest in the Kendal Industrial Park (KIP) in Indonesia’s Central Java province. Since the park was inaugurated in 2016, more than 60 companies have established their operations in the special economic zone, generating investments worth 1.73 billion dollars and creating 9,000 jobs.
Kendal Industrial Park was inaugurated by Singapore’s Prime Minister Lee Hsien Loong and Indonesian President Joko Widodo in 2016. (Photo: Kiki Siregar)
In addition to KIP, Nongsa Digital Park has also served as a digital bridge for Singapore and Indonesian tech companies, he noted. Since its launch in 2018, the digital park has grown from a handful of companies and employees to more than 150 companies and startups today, he added.
It added: “The BIT provides additional protection for Indonesian investments in Singapore and Singapore’s investments in Indonesia. This includes protection against discriminatory treatment in illegal expropriation and, in the event of a dispute, the BIT provides a remedy for international arbitration. “.
“I hope that with the certainty that the BIT provides, it will also help us promote more investment between Singapore and Indonesia and also facilitate increased trade flows and business-to-business ties between our two countries.”
