Coordinating Minister Soesilo
Deputy Foreign Minister Fachir
Pak Suryo and Pak Sofjan, Assistant Secretary Kumar
private sector representatives from Indonesia and the United States
distinguished guests, ladies and gentlemen
I am delighted to be here and want to extend a special congratulations to KADIN, APINDO, the American Chamber of Commerce Indonesia, and the U.S. Chamber of Commerce for organizing this U.S.-Indonesia Investment Summit today.
I also want to welcome the delegation of American business representatives who have taken the time to come so early in the Jokowi Administration to learn of the Administration’s priorities and opportunities for our companies.
Let me also express my warm thanks to all the Indonesian Ministers, Mayors and business leaders who will join us today.
This Summit marks an important early opportunity to further develop the growing trade and investment ties between our two nations. As President Obama has said on many occasions, America’s security and prosperity is inextricably linked to Asia and we have a long term stake in the lasting growth and prosperity of the region.
President Obama has also made clear that Indonesia’s success is in all of our interest. In his meeting with President Jokowi on Monday in Beijing, President Obama said the U.S. wants to be a strong partner with Indonesia to help it achieve its goals and ambitious reform agenda.
And there is no more important way that we can create prosperity and opportunity for our two peoples than through expanding our trade and investment.
With today’s launch of the new report, “Indonesia’s New Path: Promoting Investment, Nurturing Prosperity,” and the ensuing discussion, we will get into the specifics of how to create the right environment for the additional investment needed to accelerate Indonesia’s move towards greater economic prosperity.
This report comes at just the right time. Indonesia is poised on the brink of a new era. Indonesia is the world’s largest Muslim-majority democracy, the G-20’s second fastest growing economy in recent years. Indonesia’s middle class has grown rapidly along with the economy, bringing with it a demand for higher quality products and services.
But President Jokowi has noted that Indonesia’s growth hasn’t always been evenly distributed. Some parts of the country have grown more quickly than others and some people are still waiting to see the benefits of economic growth.
With half the population under the age of 30, Indonesia will have a surge of young people entering the work force for years to come, at a time when much of the industrialized world faces declining birth rates.
With the right education and skills training, this surge could be a demographic dividend that will help propel higher growth rates. Or it could pose a challenge for Indonesia’s future.
The good news is that President Jokowi and his new cabinet have highlighted their intent to address these challenges so they put Indonesia on a higherinclusive growth trajectory that will reach all corners of Indonesia.
Certainly one priority must be for Indonesia to move up the value chain and create more sustainable high wage manufacturing jobs for its young people. Indonesia has a great chance right now to take advantage of developments in regional and global markets.
One is that as the Chinese economy slows and Chinese wages increase, foreign companies are increasingly looking for opportunities to diversify their export manufacturing bases.
Second, plans for freer trade within the ASEAN Economic Community make it even more attractive to invest here, in ASEAN’s largest market, if the environment is right. Such regional integration should be viewed as a huge opportunity for Indonesia, rather than a vulnerability.
President Jokowi and the new leadership team understand that the key to unlocking Indonesia’s strength will be in improving infrastructure, streamlining permits, and increasing transparency so that the benefits from economic growth can be extended across this great country.
No country is as well placed to contribute to Indonesia’s development as America. This is where I would like to focus my remarks today.
For over 100 years, American companies have been major investors in Indonesia, creating jobs, bringing new technology, and providing social programs such as housing, education, and health services.
As the AmCham’s 2013 study, “Partners in Prosperity: U.S. Investment in Indonesia” detailed, American companies in the past eight years have invested roughly $65 billion into the Indonesian economy, primarily in the oil and gas, mining, and manufacturing sectors.
If the business and regulatory environment in Indonesia is conducive to further investment, American companies expect to invest another $61 billion in the next five years.
That is a lot of investment. There are almost 200,000 Indonesians working directly for American companies in Indonesia and another 1.7 million jobs have indirectly been created by American investment. Moreover, Indonesians make up 95% of the workforce in American owned companies, with many Indonesians in the senior management levels.
In my first year as U.S. Ambassador to Indonesia, I have made it a top priority to get beyond the Embassy walls and travel outside of Jakarta.
In my travels, I have sought out American businesses, aiming to see firsthand how these companies operate here and the partnerships and contributions they are making.
I have found that from Sumatra to Papua, American companies are adding value to Indonesia’s natural resources, transferring cutting edge technology, creating good paying jobs for Indonesians, and adding to Indonesia’s export base.
Let me share with you a few examples.
Mattel is great example of how US companies are helping Indonesia become more integrated into the global supply chain. Thousands of workers in Yogyakarta have made Indonesia into one of Mattel’s global centers for toy production, with Barbies and HotWheels shipped all around the world from here.
In Bogor, Fluidic Energy is a hi-tech start-up featuring cutting-edge, environmentally friendly battery and energy storage solutions. Fluidic partners with Indonesian firm Indosat to provide battery power for cellular towers that are not connected to reliable power grids.
To top it all off, Fluidic exports their green battery technologies to customers outside Indonesia.
Just down the road in Bogor, Goodyear has a major tire manufacturing facility.
Goodyear has been in Indonesia for 79 years and is both the largest employer and taxpayer in Bogor. A large exporter of high value-added products, Goodyear helps grow Indonesia’s auto sector, a priority for Indonesia’s industrial development.
In Bekasi, P&G has a state-of-the-art, $100 million diaper manufacturing facility to serve the needs of Indonesia’s fast expanding middle class. P&G plans to more than double its investment and capacity to produce more consumer products for Indonesia and the regional market.
Chevron, one of Indonesia’s largest foreign investors, brings hi-tech innovation to many parts of Indonesia. In Sumatra, Chevron is field testing technology that could push the bounds of enhanced oil recovery. If all goes as planned, this partnership will result in breakthrough technology that would bring a spotlight to Indonesia on the global stage of the oil and gas industry.
Next month, I will return to Surabaya to visit Cargill’s $100 million cocoa processing facility in Gresik to bring value added to this important Indonesian commodity.
Early next year, I plan to lead a business outreach mission to Batam, Indonesia’s free trade zone, just 20 kilometers from Singapore.
American companies have been there since 1970, when PT McDermott was the first investor on Batam, which at the time, had only 6000 inhabitants.
Today, with a population of 1.2 million, Batam is a key industrial center, and we will be engaging with government and private sector leaders on ways to strengthen the trade and investment relationship.
Caterpillar, for example, has a new $150 million mining truck manufacturing facility.
On the neighboring island Bintan I will visit Honeywell’s avionics and aviation technology manufacturing facility, a stellar example of cutting-edge technology.
I encourage any American companies out there in the audience today to join me on this Batam mission.
Any discussion of U.S. investment in Indonesia would be incomplete without acknowledging the immense contribution of American investment in Indonesia’s extractive and energy sectors.
American companies are notable leaders in energy-related investment. They represent over half of Indonesia’s oil production, nearly a quarter of its gas production, and are helping Indonesia address its energy security needs.
As Indonesia seeks to increase production to meet its rising energy demand, American companies provide unmatched technologies and global expertise, especially in the areas of deepwater oil and gas development and enhanced oil recovery. In the process, they create thousands of jobs and have demonstrated their commitment to workforce development.
These companies stand ready to invest billions more, should the investment climate be conducive.
I have been focusing on the economic outputs of these investments, from high-tech manufactured goods to value-added exports to energy output. But American companies bring much more.
American companies pay a fair wage and pay their taxes. The average wage of an Indonesian working for an American company is more than two times the minimum wage in Jakarta.
But American companies are also investing in Indonesians. American companies in Indonesia spend millions per year on staff training alone.
That is how many Indonesians are receiving work-related training to make them more valuable in the workforce and more competitive in the global economy.
American companies are also investing in Indonesian communities. ThroughCSR programs around the country, American companies spend on average almost $6 million per year to improve the lives and livelihoods of Indonesians. There are programs for almost anything – from people with disabilities, to scholarships for education, to entrepreneurship programs creating small businesses, to improving health services and cleaning up the environment.
In Balikpapan, I visited a batik fabric manufacturing facility operated by Chevron that employs handicapped Indonesians and produces beautiful fabric for sale.
Bali may be famous as a tourist destination, but thanks to American firm KKR and an innovative American NGO employee it is also home to a budding cashew nut industry. The East Bali cashew processing plant now employs over 300 local workers at good wages and pays cashew farmers higher prices for better cashews, giving local residents a chance to send their kids to school and enjoy a better life.
In East Java, near Surabaya, ExxonMobil has a program that is providing health care services, improving education infrastructure, creating economic opportunities, and supporting youth activities to thousands of families that live near their gas pipeline.
U.S. confectionary giant Mars operates a cocoa research center in Sulawesi. Research completed there has led to an increase in cocoa yields per hectare by up to five times. This will lead to expanded output, more exports, and higher incomes to the more than 600,000 farmers in Sulawesi. Mars is also working hard to protect Indonesia’s biodiversity, rebuilding coral reefs in Sulawesi.
To conclude, we are very proud American companies are Indonesia’s leading investors but also a critical source of jobs, technology, innovation and social entrepreneurship.
If President Jokowi and his team are successful in their important efforts to improve infrastructure, ensure a welcoming climate for foreign investment, streamline decision-making and improve education and skills development, I am confident high levels of U.S. investment will flow into Indonesia and multiply the positive results I have observed firsthand.
These investments in turn will help create an economically strong Indonesia that can compete in the region and globally, and a partner of growing importance and influence for the United States, Asia and the world. Thank you.