Feb 8, 2012

Indonesia - Opportunities in Malaysia for Indonesian Firms Willing to Reach Out



Relations between Indonesia and Malaysia often make it into the headlines for all the wrong reasons. In recent times, media focus has been on border disputes between the two neighbors or the fate of Indonesian migrant workers in Malaysia.

But away from the headlines, Malaysian Trade Minister Mustapa Mohamed has been working to bring the two countries closer together. Rather than only visiting Jakarta on each trip to Indonesia, he has instead spent a considerable amount of time and energy visiting the country’s vast regions to gain a better understanding of the nation’s landscape and to build ties directly with members of the public.

He knows, for example, the challenges faced by Indonesian manufacturers who want to export to Malaysia. He has visited Malaysian students studying at Indonesian universities and understands the deep ties that connect the two peoples.

What is little known is that there are 10,000 Indonesians pursuing master’s degrees in Malaysia and 5,000 Malaysians studying dentistry, medicine and pharmacy in Indonesian universities.

“There is a lot of people-to-people exchange between Malaysia and Indonesia, especially in the education field, but this is not often reported,” he said at the World Economic Forum meeting in Davos-Klosters, Switzerland, late last month. “Tourism is another sector where there is great potential for the two countries to work together.”

Medical tourism, for example is on the rise and Indonesia is one of the biggest markets for Malaysia in this sector. Mustapa said that many of the Indonesians who visit Malaysia came from outside the capital.

This is why he has focused his attention and energy on getting to know the country outside Jakarta more intimately.

“I have started to go to Manado [in North Sulawesi], Balikpapan [in East Kalimantan] and Solo because its no longer enough to just visit Jakarta,” he said. Conversely, he continued, Indonesians who visit Malaysia must go beyond Kuala Lumpur.

“Some of these provinces are doing very well, so we want to engage more deeply with them,” he said. “Secondly, we want to improve connectivity with these regions and Malaysia.”

Mustapa is now discussing establishing air links between with Balikpapan and Malaysian cities.

Third, he hopes to boost investment in both directions. Many Indonesia companies in East Kalimantan are interested in investing in Sabah, the east Malaysian state that shares a border with Indonesia.

“There are a lot of things happening in the provinces and you can feel the excitement,” he said.

His efforts are starting to bear fruit; trade between the two countries has grown over the past year. Trade between January and November last year reached $16.7 billion, up from $13.4 billion over the same period the previous year.

The latest numbers, however, only tell part of the story. Bilateral trade between the two countries has grown more than threefold during the past decade from $4 billion in 2000 to $14.8 billion in 2010.

“Frankly, we only began seriously mounting aggressive efforts toward Indonesia 18 months ago,” Mustapa said. “Indonesia is such a big country and many Indonesian companies in the past did not want to go out, but that is now changing.”

He said companies such as Sinar Mas had made huge investments in China in recent years and asked, why not in Malaysia? To woo more companies to invest in Malaysia, Mustapa hosted a delegation from the Indonesian Chamber of Commerce and Industry (Kadin) last year.

In the other direction, more Malaysian small and medium-sized companies are exploring investment opportunities in Indonesia. Companies such as AirAsia also see that Indonesia is a huge market.

“My priority is to get the business community from both sides better connected,” Mustapa said. “Intra-Asean trade and investments need a boost and the best way to achieve this is by getting businesses to talk and do business with each other.”

Shoeb K. Zainuddin
Jakarta Globe



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