Andrew Budiarto & Stephanie Tangkilisan

Indian Giants Prepare to Boost Presence In Indonesia, Tap Local Market Potential

Indian companies plan to invest heavily in Indonesia over the next five years despite last month’s twin hotel bombings, according to major participants of the Made in India business exhibition, which begins today.

The trade show, being held at Jakarta’s Balai Kartini Exhibition Center, runs through Monday and is the first major showcase of Indian goods and services in Indonesia. Top Indian companies, as well as small- and medium-sized enterprises, from industries like steel, automobiles, textiles and food will be represented.

The exhibition is being sponsored by the Indian Embassy, the Confederation of Indian Industry and India’s Ministry of Commerce and Industry, with Minister Jyotiraditya M. Schindia expected to attend. Indonesian Trade Minister Mari Elka Pangestu met with the delegates on Thursday.

India’s ambassador to Indonesia, Biren Nanda, said at a pre-launch roundtable on Wednesday that Indian investors saw great potential for growth in Indonesia given its substantial natural and human resources.

He added that the future of economic cooperation between the two countries seemed promising, with Indian investment expected to grow by 50 percent in 2010 to $6 billion.

He added that a long-term bilateral trade partnership would be a win-win arrangement for the two countries.

Nanda also said the security situation in Indonesia was not a major concern for Indian investors, even after last month’s attack on the JW Marriott and Ritz-Carlton hotels in Jakarta.

“Out of 100 delegates, no one has expressed a single concern regarding security here,” he said. “It is universally recognized that Indonesian authorities have done a good job in cooling extremist groups. One incident doesn’t change that.”

The show comes on the heels of major local Indian investments in recent years. In March 2007, Tata Power agreed to buy a 30 percent stake in two mines owned by Bakrie group unit PT Bumi Resources, and Indian aluminum producer Nalco is said to be moving forward with a $7.6 billion plant in South Sumatra due for completion by 2013.

Tata Motors, meanwhile, is considering manufacturing automobiles in Indonesia, including its low-cost ultracompact, the Nano. Amarjit Singh Puri, Tata Motor’s senior general manager for government affairs and collaboration, said on Wednesday that the company initiated a study this month to explore the Indonesian market.

K.S. Grihapathy, the president director of automaker PT Bajaj Auto Indonesia, the local subsidiary of Indian motorcycle manufacturer Bajaj, said India was in a unique position to understand Indonesia because both countries were centers of production for low-cost goods.

He also said markets like Indonesia were important for Bajaj, because “30 percent to 40 percent of our sales come from other countries.”

Meanwhile, Anil Snehi, the Asean regional head of Tata Consultancy Services, said Indian firms aimed to use Indonesia as a manufacturing base to access the wider Association of Southeast Asian Nations market.

“As much as 60 percent of Tata’s business come from outside India,” he added.

Indian companies that have already made significant foreign direct investments in Indonesia include steel maker Essar, petrochemical company Indorama and Bajaj.

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