Return of the Big Emerging Market and Tied Aid ?

In 1990 George H. Bush’s Administration provided mixed credit support to A T & T’s bid on the second digital switch for Jakarta, beating out Siemens’ heavily subsidized bid. The US finally did what it had refused to do during most of its history and especially during the laissez faire, no tied-aid Reagan years: mix government grants and loans to support a private company trying to do business in a foreign country. Surveys by AICC and AMCHAM had determined that not only were US companies shut out of the state-dominated Indonesian telecom market, they wouldn’t even bid. Because the US has no state-owned telecoms and utilities (unlike Europe, Japan and Indonesia ) to rally around getting our technology to be competitive in Indonesia has been a major challenge. In the 1990‘s President Clinton’s Commerce Secretary, Ron Brown, tapped Indonesia as a BEM (big emerging market) and developed more of a mixed credit approach to supporting US exports. A “war chest” and a Trade Promotion Coordinating Council (TPCC, still in existence) was created to package grants and low interest Ex-Im Bank loans to support US bids government tenders.

I was in Washington last week and learned that the US intends to plan a series of trade missions to Indonesia in the months ahead, starting with a clean energy business development mission to Indonesia and China led by Secretary of Commerce, Gary Locke. I had a very productive meeting with an informal interagency group organized by the US Trade Representative’s office. Not only is Indonesia in President Obama’s vision because of his upcoming June trip, but also his National Export Initiative, whose ambitious goal is to double exports within 5 years. President Obama’s March 11 executive order on exports looks very much like a re-statement of the BEM program, but with an emphasis on small and medium sized companies. All well and good but in Indonesia its often big projects done by big firms.

Just last week, China announced an offer of $2 billion of aid to Indonesia to support infrastructure projects tied to the purchase of Chinese goods, a clear shot across the US bow. To even come close to Obama’s goal in a country such as Indonesia will require a strong evaluation of the competitive position of US companies and, I would submit, a judicious use of grants and loans to large as well as small and medium firms. Yes, we do have a low interest environment that helps in financing but Indonesia may want terms such as it used in the 1990’s, 5 year grace periods and 25 year loans, terms that would be very difficult for most commercial lenders. So, its great to organize trade missions but do we have enough arrows in our quiver ?

Return of the Big Emerging Market and Tied Aid ?

In 1990 George H. Bush’s Administration provided mixed credit support to A T & T’s bid on the second digital switch for Jakarta, beating out Siemens’ heavily subsidized bid. The US finally did what it had refused to do during most of its history and especially during the laissez faire, no tied-aid Reagan years: mix government grants and loans to support a private company trying to do business in a foreign country. Surveys by AICC and AMCHAM had determined that not only were US companies shut out of the state-dominated Indonesian telecom market, they wouldn’t even bid. Because the US has no state-owned telecoms and utilities (unlike Europe, Japan and Indonesia ) to rally around getting our technology to be competitive in Indonesia has been a major challenge. In the 1990‘s President Clinton’s Commerce Secretary, Ron Brown, tapped Indonesia as a BEM (big emerging market) and developed more of a mixed credit approach to supporting US exports. A “war chest” and a Trade Promotion Coordinating Council (TPCC, still in existence) was created to package grants and low interest Ex-Im Bank loans to support US bids government tenders.

I was in Washington last week and learned that the US intends to plan a series of trade missions to Indonesia in the months ahead, starting with a clean energy business development mission to Indonesia and China led by Secretary of Commerce, Gary Locke. I had a very productive meeting with an informal interagency group organized by the US Trade Representative’s office. Not only is Indonesia in President Obama’s vision because of his upcoming June trip, but also his National Export Initiative, whose ambitious goal is to double exports within 5 years. President Obama’s March 11 executive order on exports looks very much like a re-statement of the BEM program, but with an emphasis on small and medium sized companies. All well and good but in Indonesia its often big projects done by big firms.

Just last week, China announced an offer of $2 billion of aid to Indonesia to support infrastructure projects tied to the purchase of Chinese goods, a clear shot across the US bow. To even come close to Obama’s goal in a country such as Indonesia will require a strong evaluation of the competitive position of US companies and, I would submit, a judicious use of grants and loans to large as well as small and medium firms. Yes, we do have a low interest environment that helps in financing but Indonesia may want terms such as it used in the 1990’s, 5 year grace periods and 25 year loans, terms that would be very difficult for most commercial lenders. So, its great to organize trade missions but do we have enough arrows in our quiver ?