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Singapore builds bridges
with Jakarta
By Bill Guerin
JAKARTA - The tsunami that left some
230,000 Indonesians dead or missing has acted as a
catalyst to the already improving bilateral
relationship between Singapore and Indonesia.
Singapore's unstinting support has been duly
recognized in Jakarta, with House of
Representatives Speaker Agung Laksono summing up
the consensus of parliamentary opinion by saying,
"We would like to say thank you very much for
condolences, sympathy, technical assistance and
donations from Singapore. As you know, Singapore
is the first country who gave attention when the
disaster struck."
Both countries had
earlier expressed a commitment to explore ways of
improving the often fractious ties that followed
in the wake of the downfall of former strongman
Suharto in May 1998. In early November last year,
Singaporean Prime Minister Lee Hsien Loong made a
two-day visit to Jakarta. After talks with the
newly inaugurated Indonesian president, Susilo
Bambang Yudhoyono, Lee said he wanted to solve
differences between the two countries through
proper channels instead of using the "megaphone
diplomacy" of the media. Yudhoyono echoed the
sentiment, as did People's Consultative Assembly
(MPR) Speaker Hidayat Nur. "We are trying to build
a more dignified relationship," he said after
meeting Lee.
Singapore, the wealthiest
Southeast Asian state in terms of per capita
gross domestic product, has a vested interest in
the stability of one of its closest neighbors, and
in its growth and prosperity. Disturbances in the
political and social stability of Indonesia could
have a profound effect on the tiny republic's
economy and security. Human-rights violations
suffered by Indonesian maids in Singapore, a
protracted trade dispute over Indonesian export
figures, Jakarta's demand that Singapore cooperate
in the fight against smuggling and several other
thorny issues that have caused tensions in the
past may be easier to resolve now, given that both
countries have had recent changes in leadership.
Yet Lee Hsien Loong's father and Singapore's founding
father, Lee Kuan Yew, who still holds a
cabinet-level position in government, may make
resolution and reconciliation that much more
difficult with his frequent and implicit
criticisms of the Indonesian leadership.
Stereotypical perceptions have hindered a
better understanding between the people of both
countries, with Indonesians accustomed to thinking
of Singapore as more focused on its own interests
and agenda and Singaporeans viewing Indonesia as a
disorganized, inefficient, difficult to control
country that contrasts sharply with their own
efficiency and sophistication.
Though
these polarized views may not be so common now,
Lee Kuan Yew's statements on terrorism and Islam
in Indonesia have been seen by many not only as an
unwarranted interference in domestic affairs, but
also as helping to perpetuate a negative
international assessment about Indonesia's
stability and its seriousness about dealing with
terrorism.
Lee Kuan Yew recently said
Indonesia should implement a law similar to
Singapore's Internal Security Act, which allows
the government to detain those who are suspected
of threatening the state indefinitely without
trial, with a review by a government-appointed
panel every two years. He was quoted earlier as
saying: "The Indonesians are saying that we don't
have the Internal Security Act, we can't do
anything."
When asked recently if the
tsunami damage was interfering with the effort to
combat terrorism, however, Yudhoyono said, "Our
system is still working - battling terrorism is
one of our priorities." He later added, "This is a
real threat to Indonesia ... and we have to defeat
it."
Jakarta has been trying to get
Singapore to sign an extradition treaty to drag
back "economic criminals" who take refuge in
Singapore. The island's refusal to do so has been
seen as obstructive and this is another serious
issue that needs to be resolved. The two economies
are ideally suited to a developing partnership
that can deliver benefits to both sides.
Singapore's money and managerial know-how can well
benefit joint enterprises that use Indonesia's
abundant natural resources and vast, relatively
cheap, manpower.
Well accustomed to
expanding into Indonesia (and Malaysia) as a first
step to investing overseas, major investments by
Singapore in the Indonesian banking and
telecommunications sectors over the last three
years have benefited from solid consumer-driven
growth. These investments were approved despite
political opposition to the purchase of assets of
former conglomerates and state enterprises.
More recently, Singapore has been
encouraged by the apparent prospects for a
brighter investment climate under the new
leadership in Jakarta. This optimism is so far
based only on government pledges to improve a
basket of domestic factors that dampen investor
sentiment. Sin Leng, senior executive director of
SembCorp Industries, said, "Currently there are a
lot of negative factors, like the regulations ...
unfavorable kind of labor issues need to be
resolved. They have shown their sincerity and
commitment to get it resolved. But the key issue
is how fast they can resolve these issues
effectively."
Aceh needs some US$4
billion worth of reconstruction projects. Jakarta
is drawing up a master plan for reconstruction in
the province and Yudhoyono will visit Singapore
on February 15 to discuss further needs.
Singaporeab Deputy Prime Minister Tony Tan has
already proposed construction of several
infrastructure projects, including clinics and a school,
in Meulaboh, the worst-hit town.
The
opportunity for infrastructure development - $150
billion in new investment is needed for the
development of roads, power plants and other major
infrastructure facilities over the next five years
- seems tailor-made for Singapore. Chief Economics
Minister Aburizal Bakrie apparently thinks so too.
He flew to Singapore on a one-day visit to woo
local businessmen ahead of last month's
infrastructure summit in Jakarta. "Indonesia needs
a very huge amount of infrastructure development
and investments. That's why I came here specially
to invite Singapore businesses to invest," Bakrie
said.
Some 55% of the funds, or about $80
billion, is expected to come from foreign direct
investment or loans from donor countries and
agencies, while the rest will be from domestic
resources. "We realize the government alone cannot
come up with that much money. Only 20% of that
money can be funded by the government, and 20% by
Indonesian private investors; the other 60% has to
be invested from the foreign private sector,"
Bakrie said.
Some 17 Singapore companies,
including Keppel Corp, Sembawang Kimtrans,
Singapore Petroleum, Darco Waters, and Dayen
Environmental, attended last month's infrastructure
summit in Jakarta. A total of 91 projects, valued
between $60 million to $200 million each, will be
open to the private sector for bidding. They are
projected to give an average return of 15-23%.
But chairman of Singapore Power, Ng Kee
Choe, said, "We are afraid that investment in
Indonesia may run aground as there is a huge
possibility of legal disputes, either with our
local partner or with the government as a result
of legal uncertainty." As negotiations of disputed
issues between the countries are addressed by
political leaders, some business leaders in
Singapore are keen on giving Jakarta a chance to
right the wrongs in the system before casting
judgment.
Lee Yi
Shyan, chief executive officer of
International Enterprise Singapore, formerly the Singapore
Trade Development Board, was asked how eager Singapore's business
community is to venture into Indonesia given the
uncertain security situation there. "I think
they've higher expectations, and they are prepared
to give the new administration a chance to work
out their promises. That is the basic difference
with the previous administration. So now they
really look forward to Susilo Bambang Yudhoyono's
government delivering on some of these promises -
promises in terms of improving the business
environment, unions, infrastructure, regulations
and removing unnecessary impediments in the
system," he said.
Jakarta has promised to
finalize all of the policies needed to improve the
investment climate as well as revising any
problematic regulations within six months. It has
also pledged to honor all contracts made with the
private sector. As Vice President Jusuf Kalla
recognizes, "We have to make this work, otherwise
we will never be able to do this again."
Bill Guerin, a Jakarta
correspondent for Asia Times Online since 2000,
has worked in Indonesia for 19 years in journalism
and editorial positions. He has been published by
the BBC on East Timor and specializes in
business/economic and political analysis in
Indonesia.
(Copyright 2005 Asia Times
Online Ltd. All rights reserved. Please contact us
for information on sales, syndication and republishing.) |
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