Indonesia-Singapore business ties face complex challenges

Singapore deputy Prime Minister Teo Chee Hean is on a three-day visit to Indonesia to meet Indonesian leaders.

This is part of a series of highlevel visits by Singapore leaders to commemorate Rising 50, the 50th anniversary of the establishment of diplomatic relations between the two countries.

It is therefore timely to take stock of what both countries have achieved and identify areas to further strengthen ties.

In terms of economic relations, the two countries have grown to be strong trading and investment partners, driven by mutual complementarities.

This is made possible thanks to mutual efforts by both sides to manage and maintain an economic, political and security environment conducive to regional co-operation, including under the Association of South-east Asian Nations (Asean) framework.

Security and stability have contributed to improved economic relations, thus increasing the welfare of the people in both countries.

Singapore has become the largest source of investment for Indonesia. Last year, according to data from the Investment Co-ordinating Board (BKPM), Indonesia received a total of US$9.2 billion (FJ$18.4bln) in foreign direct investment from Singapore, a 55 per cent increase amid the global economic slowdown.

Singapore as a global financial and logistics hub has indeed played an important role in directing the needed investment flow to Indonesia.

At the same time, Indonesia’s growing middle-class market has contributed to the growth of Singapore’s economy.