Indonesia looks to UAE investing $10bn by next year

Indonesia expects to ramp up investment in mining and renewable power projects and boost the number of tourists it attracts from the UAE next year, the country’s ambassador to the UAE said yesterday.

Last year, the country attracted US$1.5 billion in total investments from the UAE. This year the figure is expected to double, with Indonesia’s new ambassador to the UAE looking to attract $10bn in investments next year.

Current UAE investments in Indonesia are small and far from their potential, said Husin Bagis, who was appointed in March.

“This needs to be improved,” he said. “We have Japanese, Korean, Chinese investments, why not Emirati investments in Indonesia? We are trying to do partnerships between Indonesian and UAE companies to submit tenders for projects.”

He was talking on the sidelines of the UAE-Indonesia Business Forum in Abu Dhabi yesterday.

Currently, the Dubai-based port operator DP World, Mubadala Petroleum and Dubai Islamic Bank have operations in Indonesia.

Trade between the two countries, has, however, slowed. According to the Indonesian embassy, total exports to the UAE were $1.92bn last year, down from $2.5bn in 2014. Its imports from the UAE were $1.35bn last year, down from $1.75bn in 2014.

Mr Bagis is ambitious about the tourist numbers from the UAE, which are expected to soar to 50,000 next year, up from about 15,000 this year.

“We are promoting Indonesia and are in talks with Etihad and Emirates to make new destinations in the country and increase frequency [of flights],” said Mr Bagis.

The UAE is also seeking investments from Indonesia, especially in the industrial and construction sectors, said Mohamed Helal Al Muhairi, the director general of the Abu Dhabi Chamber of Commerce and Industry.

Despite a global economic slowdown, Indonesia’s real GDP growth rate is forecast to improve modestly next year thanks to public spending and “accommodative” financial conditions, the IMF said earlier this month. Indonesia’s growth rate next year is expected to be 5.3 per cent, up from 4.9 this year and 4.8 last year, the fund said.

The IMF’s forecast for the UAE is grimmer, with the growth rate next year projected at 2.5 per cent, up from 2.3 per cent this year, but down from 4 per cent last year.

Indonesia’s economic figures reflect the confidence of some UAE investors.

“At present I don’t expect to see much volatility in the Indonesian currency,” said Ashique Husain, the founder and managing director of Dubai-based Tanzeem International, which trades in tin, nickel, copper, aluminium and other metals. “There is political stability and [assurances] of protection of investment and the country has enough domestic demand because of the large middle class.”

His company is looking to invest in mineral processing plants in Indonesia, which banned the export of raw minerals in 2014 to encourage domestic processing.

The UAE’s top export to Indonesia is petroleum and natural gas; its top import was jewellery and cars.

Among projects in Indonesia looking for investment and joint ventures with UAE companies are the Jatiproton Industrial Estate, four hydroelectric power plants in West Sumatra worth $19.6 million, the $424m North Bali International Airport and the $20m Jakarta Women and Children’s Hospital.

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