British Companies Upbeat on Indonesia, but See Challenges

By webadmin on 09:55 am Nov 29, 2012
Category Archive

Muhamad Al Azhari

British companies in Indonesia are optimistic about the country’s business environment next year, despite concerns over the complexity of bureaucracy, legal uncertainty, poor infrastructure and labor issues, a survey has revealed.

The British Chamber of Commerce released a statement on Wednesday discussing its poll on perceived opportunities, industry prospects, investment plans and investor concerns from UK businesses that operate in Indonesia.

The annual survey, called the BritCham Business Confidence Index, showed that British companies in Indonesia have a confidence rate of 83 percent for business prospects in the country. The organization has a membership of nearly 1,000 British companies.

“British businesses are very positive about doing business in Indonesia in 2013, with our members indicating they expect increased revenue and sales, investment and spending, and plan to hire more staff,” Haslam Preeston, the chairman of BritCham, said in the statement.

He added that the chamber’s members appreciated the “work done by the Investment Coordinating Board [BKPM] in working with businesses to improve the business environment.”

While the chamber also said that Indonesia has made major progress in establishing political and social stability in recent years, providing fertile ground for businesses to expand, it noted several challenges of investing in the country, as revealed in a low score in the ease-of-doing-business section of the survey.

“Significant challenges remain, including regulatory uncertainty, bureaucratic inefficiency, the slow pace of infrastructure development and labor issues. This is reflected in our ease of doing business score of 65 [percent],” Preeston said.

BritCham suggested the Indonesian government consider three key actions: streamline and simplify government services, execute key infrastructure projects with attention to the cost and reliability of communications, and enhance timely consultation and discussion with the international private sector before introducing new laws and regulations.

The BCI also noted several sectors with high growth potential in Indonesia: retail and fast-moving consumer goods; infrastructure and construction; hotels and tourism; and services. On the other hand, agriculture, mining, utilities and oil and gas are perceived as having the least potential.

British companies operating in Indonesia include energy giant BP, lenders Standard Chartered Bank and HSBC and tobacco group British American Tobacco.

Consulting company McKinsey & Co. previously said Indonesia may surpass Germany and the United Kingdom by 2030 to be the world’s seventh-largest economy, generating $1.8 trillion in annual sales for companies in the consumer and energy industries by that year.