World Economy

Indonesia Growth to Benefit Malaysia Economy

Indonesia Growth to Benefit Malaysia Economy
Indonesia Growth to Benefit Malaysia Economy

As the Indonesian economy goes through a phase of rapid transformation and development, businesses in Malaysia are well positioned to benefit from its larger neighbor’s growth.

Malaysian Deputy Prime Minister Tan Sri Muhyiddin Yassin said that Indonesia’s economic expansion will be driven by infrastructure development, which will also make the country more competitive in attracting foreign direct investment (FDI).

Muhyiddin recently made a three-day visit to Indonesia, where he met with senior government officials and prominent members of Indonesia’s business community.

“I believe Malaysian companies will be very willing to work closely with Indonesian firms in developing new projects in the country,” he said at a meeting with the Indonesian Chamber of Commerce and Industry.

Many public transportation systems, dams, ports, streets, and power plants are being built and are expected to contribute 8% to Indonesia’s economic growth by 2019.

Muhyiddin said Indonesia needed around $420 billion (RM1.5 trillion) worth of capital for its infrastructure projects between 2015 and 2019. It’s expected that the private sector will provide 40% of that amount.

The Deputy Prime Minister also believes that integration through the ASEAN Economic Community (AEC) will support trade and investment in the region and that companies in Indonesia are competitive enough to expand into Malaysia and the rest of ASEAN.

He added that businessmen in Southeast Asia should gather more information about the AEC to take advantage of the large amount of opportunities that the community will offer.

Muhyiddin asked the Malaysia-Indonesia Business Council and the Indonesian Chamber of Commerce and Industry to step up relations between Malaysia and Indonesia in order to help businesses from both countries benefit from each other’s growth.

“I hope all the parties will identify business potentials and help each other in realizing them.”

  Agree on Cooperation

The president of Indonesia and the prime minister of Malaysia agreed last month to peacefully resolve future maritime disputes and to encourage and protect investors from each other’s country. This was Indonesian President Joko Widodo’s first state visit abroad since taking office in October 2014.

Relations between the two neighboring Southeast Asian nations had been slightly strained by Indonesia’s controversial crackdown on illegal fishing in its waters in recent months.

Illegal fishing is estimated to cost Indonesia some $23.3 billion per year, and Indonesia’s president (known universally as Jokowi) said that around 5,000 ships, mostly foreign, illegally fish in Indonesia’s coastal waters every day. In December alone, shortly after Jokowi’s announcement of the new “shock therapy” sinking policy, over 150 foreign ships were seized.