Jakarta. Key bilateral agreements, including expropriation protection and double-taxation prevention set to enter into force this year, would spur foreign direct investment from Singapore to Indonesia to a higher level, Singaporean Foreign Minister Vivian Balakrishnan said.
“The future prospect for investments and growth within Indonesia is very, very great," Balakrishnan told a press conference following a meeting with his Indonesian counterpart Retno Marsudi in Jakarta on Thursday.
The two diplomats discussed numerous strategic areas, including bilateral investments and digital economy cooperation.
"Singapore stands not just as an investor, but as a vote of confidence in Indonesia's prospects in the future," Balakrishnan said.
Singapore retained its position as Indonesia’s top investor for six consecutive years. Singapore's foreign direct investment (FDI) even surged by 50 percent in the pandemic-stricken 2020.
According to the Investment Coordinating Board (BKPM), Singapore's investments in Indonesia totaled $9.8 billion last year, up from $6.5 billion a year earlier.
The foreign direct investment (FDI) from Singapore was larger than the combined investment of the next to sources, namely mainland China ($4.8 billion) and Hong Kong ($3.5 billion)
The minister is also optimistic the FDI inflows will continue to grow, especially with the various agreements that can spur investor confidence. Among them is the Indonesia-Singapore bilateral investment treaty (BIT) which entered into force in early March. The BIT helps promote an investor-friendly ecosystem. It protects investors from expropriation and grants them access to international arbitration, among others.
“Our double taxation avoidance agreement is waiting for ratification. Our central banks have also renewed the $10-billion dollar financial arrangement to mutually stabilize our currencies during a time of crisis,” Balakrishnan said.
Balakrishnan also noted the smooth-sailing progress of ongoing bilateral projects such as the Kendal Industrial Park (KIP) in Central Java. The 2,700-hectare industrial complex is a collaboration between Indonesian urban developer Jakabeka and its Singaporean counterpart Sembcorp Development.
“The KIP [project] is going well. We are on the point of promoting the development of a port to support Kendal’s industrial development,” he said.
During the conference, Retno highlighted how the Nongsa Digital Park (NDP) in Batam serves as a digital bridge between them.
Developed by Citramas Group, the NDP acts as an ecosystem for digital talents to collaborate. Both Retno and Balakrishnan inaugurated the 166-hectare digital park back in 2018. Indonesia has also recently granted NDP the status as a special economic zone (SEZ).
“As Southeast Asia’s largest digital economy, Indonesia has a promising digital ecosystem. On the other hand, Singapore has the know-how and network to develop this sector,” Retno said.
“With the designation of NDP as SEZ, Batam will become the entry point for international IT companies investing in Indonesia," she added.
The joint statement also revealed President Joko Widodo (Jokowi) and Singaporean Prime Minister Lee Hsien Loong would meet in-person later this year for the annual leaders' retreat, which will possibly occur in Bintan.
"Digital cooperation is one of the priority areas to be discussed during the leaders’ retreat," Retno said.