Taiwan Investment in Indonesia

Taiwan Investment in Indonesia
Bennet Chen
Director, Economic Division
Taipei Economic & Trade Office
August 8, 2008

Outline
Taiwan investment in Indonesia
I. Introduction
II. Taiwan investment
III. Investment climate in Indonesia
(Strength, weakness, opportunity,
Threat)
IV. Conclusion

I. Introduction

Indonesia – One of the「VISTA」countries(others are Vietnam, South Africa, Turkey, Argentina).
Very close economic and trade relations between Taiwan and Indonesia.
Both business opportunities and risks exist in Indonesia.

II. Taiwan Investment in Indonesia

Major Taiwan Companies in Indonesia

BUSINESS SECTORS INTERESTED BY
TAIWAN INVESTORS
1990-March 2008 (*BKPM)

No. Sector Project Value (US$ Million)
1 Paper and printing industry 17 1,721
2 Chemical and pharmaceutical industry 28 909
3 Metal, Machinery and Electronics Industry 98 344
4 Textile industry 74 209
5 Leather goods and footwear industry 44 172

Major Taiwan Companies in Indonesia

Acer Computer
Tainan Enterprises
Bank Chinatrust Indonesia
Pao Cheng Shoe Co. (Nike shoes)
President Food
Nan Ya Plastics

FAVORITE LOCATIONS BY TAIWAN INVESTORS 1990-March 2008
(*BKPM)

No. Location Project Value (US$ Million)
1 Riau
5 1,491
2 Banten
104 1,290
3 West Java
170 561
4 East Java
117 292
5 Jakarta
51 100

III. Investment Climate in Indonesia

1.Strength

Excellent geographical location

Abundant natural resources

Low land and labor cost

Great market potential

III. Investment Climate in Indonesia -11.Strength-1

Stable economic development

Good economic fundamentals

IMF – confidence in RI’s economic prospects

III. Investment Climate in Indonesia -2

2. Weakness

Legal uncertainty

Burdensome administrative procedures

Infrastructure bottlenecks

Employment protection legislation

III. Investment Climate in Indonesia -4

3.Opportunity

2007 New Investment Laws – simplified procedures for FDI。

ASEAN FTA (2015), EPA (RI and Japan 2008 )

III. Investment Climate in Indonesia -6

4.Threat

Rising costs due to inflationary pressure

Rigid labor condition

IV.Conclusion

Many Asian countries suffer from economic crisis due to fuel and food price hike; however, Indonesia stands alone for her stable economic development.
To cope with the Asean FTA and market change in China, Indonesia is a good option for Taiwan company to choose from for overseas investment.

IV. Conclusion-1

There are both opportunities and risks for doing business in Indonesia, Taiwan companies are advised to act discreetly to move into the market.
Taiwan companies should move in as a group, thus they can have more bargaining power, and they can also support among themselves so as to reduce costs and risks.

IV. Conclusion-2

Taiwan company can use Indonesia as a manufacturing base in their worldwide business deployment, and sell their products to markets in other South Asian countries, North America, Middle East, Africa, etc.
More Taiwan companies will choose Indonesia if investment climate improves here.

Thank you!

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