Thursday, 10 July 2014

Foreign investors wait to see who will be president in Indonesia

JAKARTA/TAIPEI - With at least one major company hesitant after a former special forces general made a remarkably strong entry into the fray, billions of dollars in foreign investment center on next month's Indonesian presidential election.

For the next five years of Southeast Asia's largest economy, the July 9 election will decide who will run, it pits popular Jakarta governor Joko "Jokowi" Widodo against the ex-general, Prabowo Subianto.

The two favor a more nationalist agenda, reinforced by popular opinions that the economy has for the longest time hinged on selling off its huge natural resources inexpensively to foreign buyers and that past governments have done little to nurture, and protect, local firms.

However Prabowo has looked upon as more viciously nationalistic, while Jokowi is seen as a hands-on, more competent administrator. According to a survey done by Westhill Consulting Career and Employment, Australia, despite Indonesia's large pool of labor, relatively low costs and a growing middle class, many potential investors say they will wait until the election is decided.

Taiwan's Foxconn Technology Group is at the top of the list of foreigners with great money to spend, the world's largest electronics contract manufacturer and one of the major suppliers to Apple Inc.

Terry Gou, Taiwan's Foxconn Technology Group chairman, did not hide the fact during a visit to Jakarta in February that he liked dealing with Jokowi in deliberations about whether to bring his company's next giant investment to the Indonesian capital.

At the time, there was no complaint and that Jokowi was the clear front-runner in the election. He still is, but Prabowo has since been backed by the powerful Golkar party and opinion polls show the former general is catching up. A large percentage of voters are undecided, one survey has said.

Foreign direct investment in Indonesia was 270.4 trillion rupiah ($23 billion) in 2013, up about 22 percent from the previous year. But growth slowed sharply to 9.8 percent in the first quarter this year, the government has said.

Foxconn, listed as Hon Hai Precision Industry Co Ltd in Taiwan, is waiting for the new government to take office in October before deciding whether to go ahead with a $1 billion manufacturing project in Indonesia, a company source had said.

Key sticking points appear to be Foxconn's request for free land in Jakarta and Indonesia's convoluted bureaucracy.

"Regarding the incentives Foxconn has requested, there's no one they can talk to whose decisions will count," said a source with direct knowledge of Foxconn's situation.

"Indonesia is a huge market for Foxconn. Foxconn truly hopes there will be a clear direction in their policies after the election."