France to Boost Investment with Indonesia

France to Boost Investment with Indonesia
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French Prime Minister Francois Fillon pushed to double trade and boost investment with Indonesia on a state visit to Jakarta on Friday, as French firms in his entourage pledged over $2.5 billion of energy and infrastructure investments. Foreign direct investment in Southeast Asia’s biggest economy has surged this year to tap its resources, booming domestic demand and infrastructure plans, though European and US firms have lagged investors from Asia so far. The businesses of the 28 firms accompanying Fillon read like a dream list of Indonesia’s infrastructure needs, from power and transport engineering group Alstom to water and waste services utility Suez Environnement. Fillon said bilateral trade between the two countries was just 2.4 billion euros ($3.4 billion) in 2010, adding France wants to double this in five years. By comparison China, Indonesia’s top trading partner, had ten times as much trade and also aims to more than double that by 2015. “We must do better, all the more because our economic specializations are largely complementary,” said Fillon in a speech to the French chamber of commerce in Jakarta, citing the country’s governance progress, young population and strong growth as factors turning it into a major emerging market. Indonesia wants private investors to fund two-thirds of its $150 billion infrastructure needs, with the sector seen as both a business opportunity and a deterrent to further investment. Indonesia’s investment chief, Gita Wirjawan, said French firms pledged about $2 billion for geothermal, in a country producing around 1,200 megawatts of power from the renewable energy source but with the potential of an estimated 28,000 MW. Wirjawan did not mention names but Alstom, energy major Total and utility GDF Suez were likely candidates in the delegation. Total is already a major investor in Indonesia, spending $2 billion a year on one gas field alone. Airbus parent and aerospace giant EADS said it would expand through a joint venture with state planemaker Dirgantara Indonesia. Indonesian flag carrier Garuda will buy another four Airbus 330 aircraft this year, the government said on Friday, adding to 25 planes it bought last month in Paris. EADS executive Jean-Pierre Talamoni said he saw Indonesian demand from civil aviation rather than in defence, though the French delegation also included naval shipyard DCNS and defence electronics group Thales, with Indonesia looking to lift its low spending on military hardware. President Susilo Bambang Yudhoyono said the two countries signed a defence cooperation pact for Indonesia to buy defence equipment from France that it could not make itself, and to have joint production in the future. Indonesia is seeing economic growth of around 6.5 percent this year and Yudhoyono wants to turn the G20 member into a world top ten economy by 2025 by improving infrastructure, innovation and training. Growing wealth and a building boom in commodity-rich provinces is drawing the world’s largest cement maker Lafarge to invest 3.5 trillion rupiah ($408 million) in a new plant in northern Sumatra island, where it said demand is growing more than 10 percent. “It goes along with the will of the government to develop infrastructure. To go beyond [6 percent growth] the government needs to put a great focus on infrastructure,” Isidoro Miranda, co-president of its cement division, told Reuters in Jakarta. France and Indonesia also signed a letter of intent to build a railway in the western part of the main Java island, which could be worth around $200 million, as the country tries to overhaul a dilapidated and overloaded transport network. Reuters Source: The Jakarta Globe

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