Indonesia-Asian New Growth Nation


With Asia stepping into the forefront of the economy, Indonesia is poised to be the next big thing after China and India. Can Malaysia shed its old prejudices and play ball with the new “big boys” of the world?

AS Europe and North America continue to flounder economically, Asia is experiencing an unprecedented wave of prosperity. Forbes’ magazine’s Annual List of Billionaires underlines a startling increase in the number of Indian, Chinese and now, Indonesian names, reshaping the global ‘wealth’ map.

This is an historic opportunity for us in Malaysia. Can we harness the exuberance and economic dynamism of Mumbai, Shanghai or indeed Jakarta to help drive our nation’s future growth? Can we attract investments from these three giants?

However, there are socio-political pitfalls facing this economic challenge. On the one hand, our famed diversity should be our greatest strength.

Sadly, the fragility of Malaysia’s race relations means that we’re unable to harness this as well as we should.

These complications will continue to hamper our ability to leverage off China and India’s growth in moving forward.

Indeed, Chinese investment in both Singapore and Indonesia far outstrips FDI into Malaysia.

Indonesia presents a different set of sensitivities.

Bilateral relations are complicated by our very proximity.

At the same time, the presence of a large Indonesian community within Malaysia (estimated at between 2-3 million both documented and undocumented) means that there is a constant stream of real life and often harrowing tragedies that unsettle the even keel of bilateral relations.

However, if we can manage these difficulties Malaysia stands to gain and the potential is stupendous.

Furthermore given the intertwined geography, this growth story can impact the entire nation from Kota Kinabalu, Kuching to Malacca and Penang.

Indonesia represents a test-case: can we re-tool quickly enough to capture inward investment from our largest neighbour?

Will our civil service and security apparatus be able to adjust to the dealing with wealthy middle class Indonesians buying homes and investing in Malaysia?

Having hosted millions of unskilled workers for decades, can we cope with an influx of articulate and confident middle-class Indonesians – many of who have become emboldened by their Republic’s post reformasi-era’s openness? Are we capable of overcoming our prejudices?

Indonesia’s leading businessmen are a tough-minded crew.

The Republic is not a place for wimps or those expecting handouts.

The commercial environment is brutally competitive and often confusingly opaque.

A glance through Forbes’ Indonesian edition with its list of Republic’s 40 richest tycoons reveals a diverse mix of men and women with interests ranging from natural resource extraction to those dealing with the vast 230-million strong consumer market.

Moreover a booming stockmarket has led to a 70% increase (since 2009) in the combined wealth of the business figures included on the Forbes List.

Indeed the 40 names are worth more than US$70bil (RM220bil) – a third of Malaysia’s economy.

The list of super-rich is also a timely reminder to those who think that Indonesians are merely palm oil plantation workers, construction labourers and household servants. The list reinforces the economic energy and diversity of the archipelagic republic.

With billions in hand, many of these tycoons (especially those who also own newspapers and/or TV stations) wield considerable power and influence. Many are “players”.

Indonesia’s richest man is Budi Hartono, the co-owner and CEO of the kretek manufacturer, Djarum Group. The rich but reclusive tycoon owns a highly diversified business empire that includes the ubiquitous bank, BCA and the enormous iconic property development, Grand Indonesia.

Together with his brother, Michael, they have seen their assets shoot up by 55% to more than US$11bil (RM34.6bil) in 2010.

Budi Hartono’s low-key manner is contrasted with the renowned property developer, Pak Ciputra or “Pak Ci” as he is fondly known.

With 40 years experience of developing successful townships, housing-estates and recreational centres across the wide archipelago – he has built projects across South-East Asia but not in Malaysia: a glaring omission.

There also younger names on the Forbes’ list including the personable and handsome, Sandiago Uno, co-founder of Saratoga Capital, one of the largest Indonesia-focused private equity firms with interests from infrastructure to coal.

At the same time everywhere I’ve visited in Indonesia – from Padang to Surabaya, Balikpapan and Makassar, local businessmen (part of the 30-million strong middle class) have responded enthusiastically about Malaysia as a destination for FDI – whether large or small.

We need to figure out a way bringing Indonesian growth to our shores. The economic and government transformation programs, ETP and GTP must appeal to foreign investors, especially the new giants.

As it is, Malaysians build some of the best highways, homes, hospitals, hotels and retail centres in Asia. Now we need to ensure that the “Truly Asia” slogan works as a real welcome for all our Asian neighbours.

As I’ve said before-Indonesia represents a test case for Malaysia. If we are able to “do business unusually” – then we are gamed to play with the “new big boys”.