World Report

British companies are among the largest foreign investors and are taking a lead in supporting community initiatives

ndonesia is one of the UK’s major business partners and a chief ally in the expanding Southeast Asian region. With a long and shared history, there are extensive links not only in the business and commercial arenas, but also on the social and cultural side.

For over half a century, British ties to the Indonesian archipelago have expanded in virtually every imaginable area. Today, the British government has a key role in supporting Indonesia’s development agenda. This includes sizeable donor aid through both bilateral and multilateral channels, as well as additional development assistance.

The UK is already the second largest foreign investors in Indonesia. Accumulated investment since 1967 is estimated at over £50 billion. This is mainly centred on areas such as energy, chemicals, mining, transport, communication, food, property and hotels. Many of the world’s largest companies, such as oil giant BP, are well established. BP is taking an active role in various community and decentralisation initiatives across the country. As a major energy producer, it also wants to help Indonesia utilise its vast gas resources. In a region dominated by energy-dependent superpowers China and Japan, the country will play a vital role as an oil and gas exporter in the years ahead.

Continued investment from Britain and other countries is essential for ongoing economic advancement. Indonesian Vice President Hamzah Haz believes that the international community still has faith in the country, despite recent difficulties. The high take up of local bonds in the financial markets by local and foreign investors underlines the return of confidence. “The people in Indonesia and the international community are still confident that the economy is in good condition,” he says.

The climate for investment is improving all the time. Minister of Communication and Information Syamsul Mu’arif says today’s Indonesia is a different place to the one that was on the brink of collapse in 1997. Mr Mu’arif explains that the basic principle underpinning the new regime is “the desire to establish a governance system that is based on the spirit of democratisation, transparency and accountability.” These are the things, he says, that have enabled the nation to break free from the corruption and nepotism that is now in the past.

More British companies are waking up to the opportunities on offer and there are new areas of business opening up, such as natural resources management, telecommunications and light manufacturing.

The government is encouraging more interest from British firms in agribusiness and fisheries in a bid to boost home-grown food production. British firms may benefit in the sale of used fishing vessels and the supply of training and expertise in cold storage and processing techniques.

There is also strong bilateral trade in goods and services between the two countries, with the balance weighted in Indonesia’s favour. Major UK exports to Indonesia include aircraft and parts, machinery, chemical products, vehicles and spares and medical devices. Indonesia’s primary exports include shoes, plywood, textiles, cloth, electronics, toys, furniture, coffee, tea, chocolate and spices.

The links extend beyond politics and business. Not only is Indonesia a popular holiday destination for British visitors – the number of British visitors totals nearly 200,000 each year – there are also various cultural ties between the two states. High-level co-operation agreements cover the fields of education and science, for example. Other initiatives focus on conflict reduction, humanitarian aid and other relief projects.

I. Gede Ardika, Minister of Culture and Tourism, says Indonesia can learn from the UK and its rich heritage. “People can easily recognise a British person because they manage to keep their traditions and culture in their life. We would like to learn from that because we are a young nation; we have been independent for only 58 years and comprise many ethnicities.”