AICCnewlogoltr
OutlookBanner
cameragirlsmall oilgassmall papayagirl borobudursmall

COMMENTARY ON US-INDONESIA COMMERCIAL DEVELOPMENTS FROM THE AMERICAN INDONESIAN CHAMBER OF COMMERCE

Top AICC Homepage

Tuesday, November 29, 2011

Pivot to Asia

Indonesia fell smack in the middle of the Obama Administration's much ballyhooed "Asia Pivot", a wonderful image for the ramp up of engagement with Asia that it has demonstrated. The Administration is to be commended for both the symbolic and real commitments it has made to the region in general and Indonesia, specifically. One could argue that the "pivot" has been underway for a while: President Clinton shepherded the formation of APEC and created a mixed credit "war chest" to support US bids in Indonesia, and although George W. Bush was preoccupied with the Middle East, he still made time for the region and paid visits to Indonesia twice. When I think of the word "pivot" Wilt Chamberlain and Bill Russell come to mind; these huge basketball players would take a pass in the middle, fake one way, pivot off one leg and rise up for a layoff or, more often than not, a slam dunk. Just considering Indonesia alone, here's the pivot move we witnessed in the past 2 weeks. Judge for yourself if it was a slam dunk or just a layup:
  • The US hosted APEC in Hawaii, affirming our commitment to a rules-oriented trading regime in the Asia Pacific region. Although voluntary, APEC will be a catalytic influence in our more formal free trade attempt, the Trans Pacific Partnership. Although Indonesia says its not ready, it by and large viewed TPP positively.
  • In Australia, Obama concluded an agreement with Australia to house 2500 Marines on a base in Perth (only 400 miles from Indonesia) on a rotating basis. With the US out of Subic/Philippines, this strengthens the US commitment to the region, checks any extra territorial designs of China, and puts disaster relief personnel close to where they are likely needed: Indonesia.
  • A US President participated for the first time in the East Asia Summit held in Bali, Indonesia. Within one week, President Obama had significant face time with Asia's leaders both on our soil and theirs.
  • US is giving Indonesia 24 decommissioned F16's and $750 million towards their reconditioning.
  • Indonesia has qualified for US Millennium Challenge Corporation grants of $600 million focused on renewable energy projects.
  • The US and Indonesia renewed a science and technology to increase the capacity to reduce the risk of natural disasters.
  • Boeing signed an MOU with Indonesia's Lion Air that could lead to its largest commercial order in the firm's history: 237 737's valued at $22 billion backed in part by US EXIM Bank.
  • GE also agreed to sell 50 CFM56 engines to Indonesia's state-owned airline Garuda for $1.3 billion.
  • Caterpillar will build a new mining truck facility in Batam (near Singapore), investing $150 million
Its great to see private trade deals announced when a US President visits a country, but they are often in the works for months before and become part of the symbolism of "commitment". The US cannot compete with the state capitalism of China which announced billions of infrastructure investments to help Indonesia and ASEAN "connectivity", but it did what it could to put some teeth behind the good will of Obama's November 2010 visit and made a strong statement of the connection between Asia and US jobs.

Tuesday, September 6, 2011

Web Meeting on Establishing a Small Business in Indonesia: September 7, 7-9 am

Our partners, AMCHAM Indonesia, have organized a live, online briefing on how to establish a small to mid size business in Indonesia. Members of AMCHAM's SME Committee will be discussing business opportunities and best practices. A business case will be presented. Jim Filgo, an AMCHAM Indonesia Governor who heads its SME Committee, will be joined by other members and experts.

The briefing will be broadcast on the internet at 7 AM NY time from the new @America facility in Jakarta. @America is a high tech center established by the US State Department to help young Indonesians explore and connect with America.

To participate, please register at the time of the event as a guest at: http://meet43723687.adobeconnect.com/amcham/

Wednesday, August 31, 2011

What's In a Sovereign Rating ?


I admit to not being a savvy investor. I am basically the type that lets a professional figure out what to do with my money. My big investment decision, like many people, was buying a home. I know enough to know that having a strong sovereign rating has a definitite correlation with the cost of capital. Every step Indonesia has made to achieving investment grade lowers borrowing costs. The ratings help lenders assess risk but their effect on investors may be more complex. For example, the average rate of return on the Jakarta Stock Exchange over the past 10 years--a time when Indonesia's sovereign rating was BB- to BB+-- was 29%. If during the same period --a time when the US sovereign was AAA-- the Dow had kept pace, it would be over 100,000 today. Of course, some would call this an absurd comparison but it just shows you what you can do when your sovereign rating is not even at an A level. Savvy investors know how to find value looking beyond the indices and Indonesia is proving that day in and day out even though its sovereign rating has yet to achieve investment grade. Perhaps the anticipation of it occurring is more beneficial than if it already had it. Seduction often brings more pleasure than conquest.



Idul Fitri

All of us at AICC extend our warmest best wishes to our Indonesian colleagues celebrating Lebaran, the end of the annual fasting period.

Blog Archive

About Me

My photo

President of the American Indonesian Chamber of Commerce, a private not for profit membership organization based in NY.

These views do not necessarily represent those of the American Indonesian Chamber of Commerce or its members.

Top AICC Homepage