Indonesia - Singapore Trade Statistics

Singapore with only 710km2 ranks 189th is leading ASEAN country for GDP / Capita (Nominal) with USD 50,323. Driven by 5.3 million people, Singapore has transformed into the most important hub for logistics and financial services industry in South East Asia. 

Economy growth in Singapore has less figures if compared to Indonesia, with only 2.5% - 3.5%. It has had the highest economy growth nearly 15% in 2010. Singapore is much rely on its financial industry, trade services and logistics industry to support its economy. Singapore's largest and busiest port known as Keppel has handling capacity of 32 million TEUs (Twenty foot Equivalent Units), far ahead than Malaysia's Port Klang and even Indonesia's Tanjung Priok. 

Changi Airport has also recognized as one of the largest and greatest airports in the world. In 2012, Changi Airport with handling capacity of 66 million people handled more than 51 million passengers. This two logistics services have boosted Singapore as the most developed ports in the world and leave behind other ASEAN countries including Thailand, Indonesia and Malaysia. 

In terms of doing business in Singapore, obtaining business license has never been easier. Singapore is given a #1 rank in terms of ease of doing business based on survey conducted by doingbusiness.org. Indonesia itself ranks 128th, left behind than its neighboring countries such as Malaysia (12th), Thailand (18th), Brunei (79th) and even Vietnam (99th). 

Source: Doingbusiness.org 

President Director of Bank Mandiri, Budi Gunadi stated that more than USD 200 billion or equivalent to IDR 1,500 trillion belong to Indonesian people is kept in Singapore. Singapore has proven its banking system and reliable security for its financial provider including Bank. Known as tax heaven as well, Singapore has really played its role very well as the safest and largest financial hub in South East Asia. 

Now being the largest financial and logistics hub, how important Singapore is to Indonesia. Has Singapore given benefit in terms of bilateral trade between two countries? Indonesia with abundant natural resources, manufacturing facility, rich demography, massive population should have enjoyed trade surplus with Singapore. Yet, statistics figure show different facts, Singapore has really enjoyed doing business with Indonesia with trade surplus more than USD 11 billion from year on year.

Source: Indonesia's Statistics, Processed by Invisindo

With the implementation of AEC in 2015, Singapore with only 5.3 million people will have the huge opportunity lies ahead covering a single market amounting 600 million people when AEC is implemented. 

Implementation of Asean Economic Community 2015

AEC (Asean Economic Community), New Capitalization in South East Asia?

It was only 10 years ago in 2003, when ASEAN leaders concluded a new joint force of economy named AEC (Asean Economic Community). Indonesia as leading country for ASEAN had also participated to conclude this agreement. Initial target to implement AEC was 2020, yet in 2007, these ASEAN leaders had agreed to accelerate it by 5 years. Within 2 years from now in 2015, AEC will be fully implemented and integrated among ASEAN members. 

The AEC concept is adopting similar concept to European Union (EU), which its concrete policy and benchmark can be seen through its currency (Euro). During the endorsement of EU, there were also many obstacles and barriers among the European countries. There were also many debates from each country delivering their argument and objection of this community, yet these days, EU has become greater power in Europe and ultimately a prominent contender to other similar organization including ASEAN.

The main concept of AEC is "Single Market" which will cover the main 5 elements known as:

1. Free Flow of Goods (Elimination on Import Tariff)

To date, import tariff among ASEAN Countries have nearly reached 100% including sensitive and     non-sensitive products). There are still few products imposed with import tariff from origin country to protect local industry. However, when AEC is fully implemented in 2015. We can expect that all tariffs will be eliminated to zero. (Elimination on Import Tariff)

2. Free Flow of Services

3. Free Flow of Investment

4. Free Flow of Capital

5. Free Flow of Skilled Labor

Indonesia is indeed has achieved global significant recognition from investor rating agency as a an Invested Country. Massive population with more than 245 million people drive the Indonesia's Economy as the 17th biggest economy countries in the world, highest economy growth in ASEAN with average of 6%, driven by young productive worker, abundant natural resources and other absolute advantage. 

Investment realization to Indonesia has been increasing from the last five years which these three countries remain as the biggest investors (Singapore, Japan and Korea). The second and remaining parts of ASEAN single market talks about free flow of services, free flow of investment, capital and skilled labor. 

Especially for services and skilled labor, industry which focuses on services such as financial, logistics, healthcare and tourism are concrete targets to hit for the implementation of AEC. Foreign hospital is likely to be seen in Indonesia, foreign doctors and added with numerous expatriates from ASEAN countries work in Indonesia as part of the agreement. This statement has been debated by many people and raised a question? How ready Indonesia is to prepare the implementation of AEC?

The Free flow services is not new thing in Indonesia, numbers of foreign services based company which serving passenger such as Air Asia, Jet Star and others have expanded their market into Indonesia and serve domestic market flights. Foreign hospital joint cooperation between Lippo and Siloam was also another impact of the implementation of AEC. Soon, there will be more foreign providers from ASEAN offering their technology, product and services as part of the commitment. 

ASEAN as single market will focus on 12 industries such as Agro Based, Automotive, E-Commerce, Electronics, Fishieries, Food Agriculture Forestry, Healthcare, Rubber Based Products, Textile, Travel, Tourism and Wood Based Products. All these industries will be targeted during the implementation of AEC to enhance the captive market size of 600 million people. 

While, Indonesia is still debating on increasing the labor wage (Minimum Provincial Wage) and preparation for the Presidential Election in 2015, other countries such as Singapore, Malaysia, Thailand and others are preparing their strategy and increase their competitiveness into entering global market in ASEAN including Indonesia. 

ASEAN members such as Singapore with 5 million people, Malaysia with 30 million people and others will enjoy the new single market covering 600 million people and 40% among that figure is Indonesia. The fact that Indonesia enjoys stable economy growth of 6% is a good one. Yet, domestic consumption and investment mostly contributed to the growth. Domestic consumption from middle class group has become a target for other ASEAN countries. Investment from local and foreign companies have also boosted the Indonesia's economy growth. Yet, it is fragile......

The new fiscal policy sets by Federal Bank in US has caused massive stock sell and created panic in the financial market. India and Indonesia especially suffered the big lost. Many investors sold their stake and choose to cash carry and resulted in declining of Indonesia's rupiah. Indonesia has not yet transformed into Industrial based country, many raw materials are still needed to produce the final good especially for manufacturing industry. The depreciation of Rupiah against USD has created even massive panics in the market as Indonesia is still highly dependent with local consumption and domestic market.

Source, Wikipedia, Processed by Invisindo

Indonesia will enjoy "only" 2.5x market expansion during the implementation of AEC. Singapore with 5 million people with enjoy 120x bigger, Malaysia itself will enjoy nearly 30x times bigger and other countries as well. While other countries are seeing Indonesia as their target, how about Indonesia? How prepared is Indonesia to face this AEC? The impact has not yet seen now, however within 3 years from now, it would probably seen.

In terms of balance of trade with ASEAN countries, Indonesia suffered deficit nearly USD 11.8 billion resulted from export-import activity within ASEAN countries. Indonesia only gained trade surplus from countries such as Philippines, Myanmar, Cambodia and Laos. Whilst, Indonesia's closest neighbor, Singapore, Malaysia and Thailand have shown its absolute advantage against Indonesia. Even PM of Thailand, Yingluck Shinawatra has made clear statement that 2013 is the year of Thailand.

Source, BPS (Indonesia Statistics), Processed by Invisindo

Despite of its trade deficit, Indonesia needs to improve in many things, acceleration of economic growth master plan known as MP3EI has been well setup to accelerate Indonesia's economy growth. Yet, there are still plenty of barriers need to improve such as infrastructure, logistic cost, political stability, security, labor issue and other things. Whilst, other ASEAN Countries are preparing their competitiveness in product and services, Indonesia is still striving to eliminate these barriers / obstacles.

As the implementation of AEC is within the distance, Indonesia's government is obliged to provide socialization of AEC to local community (private company, state owned company, student and others) to increase global competitiveness and sustainable environment of Indonesia's product and services within ASEAN countries.

Foreign countries such as USA, UK, Korea, Japan, China and countries such as Spain, Georgia, Ukraine, Italy, France and Germany have also dispatched their ASEAN Ambassador to Indonesia in order to cope and adjust when the implementation of AEC takes place. These Ambassadors will have focus on ASEAN Single market known as AEC. Some supports have been shown by several countries like Thailand by launched a new site for AEC Tourism.

Source: http://en.aectourismthai.com/

There are many rooms to socialize the AEC concept to community not only for Indonesia's people but also other ASEAN countries. After all, the main concept of this Single Market is for community needs not government. If community knows nothing or lack of information of this AEC, should it called failure? For further information about trade, investment and country news, please refer to below site:
1. Indonesia Trade News
2. Indonesia Investment News
3. Invisindo Country New

Invisindo is regularly updating trade and investment news for global stakeholders as well as country profile for our readers. Stay updated by visiting our website.

Invisindo is a market research company and investment consulting agency, visit our website at http://www.invisindo.com/indep.php for more details. For further information about AEC, please visit ASEAN's website.

Country Profile: Georgia, a dazzling country from Eastern Europe

On May 27, 2013, Georgian Embassy has officially announced its embassy at Jakarta, Indonesia. H.E. Zurab Aleksidze as the Ambassador had successfully launched "meet and greet" session with Ministry of Foreign Affairs of Indonesia and friends. Georgia's embassy at Jakarta will cover the entire ASEAN which its headquarter will be located at Jakarta. Indonesia as the only ASEAN country in the G-20 Club has become a main attraction to foreign embassy to set an office here at Jakarta, Indonesia.

Despite of the political issue, we would like to provide trade and investment news from Georgia, includes list of potential products and investment opportunity in the country. Georgia with more than 4.5 million people offers lucrative business cooperation and bunches of investment opportunity. 

US and UN Support

Georgia continues to demonstrate its commitment to the alliance as the largest non-NATO contributor to the international force in Afghanistan and has redoubled its effort to reform and improve its military following its lost to Russian forces in 2008. As a sign of the continues US Support for its Georgian allies, on the US Millennium Challenge Corporation recently agreed to provide the Government of Georgian USD 140 Million to fund science and technology education and workforce development. 

To present, Georgia has not yet become a member of European Union as Georgia is striving to have appraisal support from EU Committee. Once they become a member of European Union, Georgia will enjoy all benefits given from the organization and eventually will boost its trade and investment opportunity as well as Free Trade Agreement (FTA) with neighborhood countries including ASEAN. 

Economic Reforms

Georgia has committed to provide major downturns to reform its economy, including its economic reforms. In 2013, the World Bank ranked Georgia 9th in its 2013 Ease of Doing Business Report. To sustain and improve this track record, Georgia is overhauling its tax payment, inspection and enforcement systems to increase transparency and decrease onerous fines. The Georgian Government has also nearly completed works on amendments to the anti-monopoly law on competition and free trade.

In November 2013, Georgia will sign a memorable and comprehensive FTA as part of its EU association agreement. The EU forecasts that the DCFTA will increase Georgia's export to the EU by 12% and imports from the EU by 7.5%. Full implementation of trade-related reforms could increase Georgia's long-term GDP by 4.3%. 

Source: www.invisindo.com 

Balance of Trade from Two Countries

Georgia is mostly depending on its agricultural and wine products. Being the largest Muslim Country in the world does not turn Indonesia as a non-alcohol society. The rise of FDI companies mostly from Japan, China and Korea has boosted the sales of alcohol and wine products. Further information about wine business in Indonesia, click here. 

Indonesia enjoys surplus from both countries with more than USD 45 million in 2012, most of Indonesia's products exported to Georgia are palm oil, coffee and paper. While, Georgia's export include scrap, aluminum and cyanides oxides. As Georgia is boosting its agricultural product, an opportunity remains for Indonesia's importer of agricultural products, include bean, nuts, mineral water and wine. 

Source: Indonesia Statistics, Processed by Invisindo

Tourism Destination and Business Opportunity

Georgia offers exotic destination for tourist despite of its distance. Located at the peninsula of Eastern Europe and Caspian Sea, Georgia is best for summer and winter time. Average temperature on summer season is around 19-22 Celsius (definitely cooler than Indonesia), while winter season may enough to freeze you with 1.5-3 Celsius. Adopting Eastern Europe Countries, Georgia has cultural rich site to visit, which is more than user and environmental friendly for those who are seeking leisure time. 

Direct flight is available to Tblisi's Airport, a Georgia International Airport. A flight from Amsterdam and Turkey can be accessed directly from Jakarta's International Airport. For further information about travel to Georgia and other important links are provided below:

1. Travel to Georgia

2. Georgia's National Tourism Administration

3. Georgia's National Wine Agency