Tuesday, May 07, 2013

Italian industrial firms expect to tap into Indonesia's robust economic growth by strengthening their presence in the country through investment, a visiting industry group says.

Giorgio Squinzi, the president of Italian Industry Association, Confindustria, said on Monday in Jakarta that Indonesia was one of the most interesting countries in the Southeast Asian region as it continued strong economic expansion amid protracted slowdown in the global economy.

"Confindustria has been examining for over a year the free trade area of ASEAN [the Association of Southeast Asian Nations] to pinpoint commercial and industrial opportunities in such a large and expanding market. Thanks to its resources and its large size, Indonesia is one of the most interesting countries in this area as in a period of economic crisis, it has managed to maintain a 6.2 percent yearly average growth rate," Squinzi said.

In addition to this, around 54 percent of Indonesia's external trade was with its neighbors in Asia, a region which would serve as a future market for Italy, Squinzi added.

At present, investment from Italian firms are limited to several sectors, such as energy, automotive and footwear.

Italian oil and gas company Eni SpA plans to invest US$400 million over the next few years in Indonesia, including in Bulungan block in the Makassar Strait and in Muara Bakau Strait.

Italian tire company Pirelli & C. SpA, is developing a $120 million motorcycle tire plant in East Jakarta in collaboration with PT Astra Otoparts, a subsidiary of Indonesia's major diversified group, PT Astra International.

The biggest-ever Italian business delegation comprising 57 enterprises from the automotive, infrastructure, energy, finance, mechanics and telecommunication sectors, eight banking groups and 10 business associations, including Confindustria, is currently on a three-day visit in Southeast Asia's largest economy.

Guidi Rosa, a member of Italy's Banking Association ABI presidency committee, said that Italian banks were seeking fresh opportunities in new markets to offset slowdown in Italy.

"Our presence for the first time in Indonesia, aside from those Italian companies that have chosen to operate in this market, confirms our support to the internationalization of economy, especially in such a persistently complex phase for Italy due to the national and international crisis," he said.

Chris Kanter, the Indonesian Chamber of Commerce and Industry (Kadin) deputy chairman for trade and international economic cooperation, said that Indonesia could get a myriad benefits from its increased trade with Italy in the future as both countries had a high level of complementarity.

Two-way trade totaled ¤3.4 billion ($4.46 billion) last year, with Italy importing goods and commodities worth ¤2.2 billion and exporting ¤1.2 billion, according to Italian statistics.

Apart from investment, Indonesia could particularly benefit from Italy's expertise in producing high-quality machinery, while Italy could take advantage of Indonesia's large pool of workers through investment in labor-intensive sectors.

"If they [Italian firms] make Indonesia their production base, we can serve ASEAN markets as we are creating the ASEAN economic community," he said.

Investment from Italian firms has so far been smaller than those of other European countries, with last year totaling $22.9 million, according to the Investment Coordinating Board (BKPM). (fan)

By Linda Yulisman, The Jakarta Post, Jakarta