Asean’s biggest economy has become an investment hot spot, but regulatory uncertainty, endemic corruption and skilled labour shortages are big challenges, say Thai companies.
Rapid economic growth but a sharp rise in income inequality. Well-connected industries thriving and the number of millionaires forecast to triple by 2015 — even as half of all households hover near the poverty line. Such are the contrasts in Indonesia today.
“Indonesia is in a huge transition period from being an inwardly focused, lower-end economy to one that’s evolving very quickly with average growth of about 6.5% per year,” says Somsak Pipoppinyo, director of the Finance, Industry and Infrastructure Directorate of the Asean Secretariat.
“Being a consumer market of 240 million people, with more than 10% of this number in the middle to upper-income class, the self-reliant economy has a lot to offer for new investors.
“That is really good news for Thailand, as we now have a number of big business players and consumers at our doorstep.”
He said big businesses from Thailand such as the coal producer Banpu Plc, Siam Cement Plc, Bangkok Bank and Thai Union Frozen Group have already responded to this huge opportunity. However, beneath the impressive headline figures seen in recent years, there is a darker side to doing business that all companies have experienced.
“Banpu ventured into Indonesia, where coal resources are abundant, in 1990. Over the last decade, we’ve become the fourth largest Indonesian coal producer with full production capacity of around 20.5 million tonnes per year,” said Pongsak Thongampai, president-director of the Thai company’s Jakarta-listed subsidiary PT Indo Tambangraya Megah.
“However, the problems that we’ve been through frequently involve dealing with the uncertainty of regulations and fees which are considered vague, conflicting and subject to interpretation, particularly to foreigners.”
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