Vincent Lingga - Opinion Column

Norway geared up for ‘big bang’-style trade and investment in Indonesia

Vincent Lingga, The Jakarta Post, Oslo | Wed, 06/13/2012 11:27 AM

Gunn Ovesen (left) and Trond Giske: (Courtesy of Innovation Norway)

Oil and gas-rich Norway is gearing up to enter Indonesia’s economy in a “big bang kind of way” through investment and trade, focusing on the hydrocarbon industry, marine and maritime services, hydropower, health care and the environment.

While both countries are still negotiating a comprehensive, strategic economic partnership agreement, an increasing number of Norwegian companies, with the full support of their government, are preparing to enter Indonesia’s economy in a major way.

“Indonesia needs deep-water technology in oil mining and, being a vast archipelagic country, it also needs to develop its marine and maritime industry. My country has a very strong competitive edge in both industries,” said Norwegian Trade Minister Trond Giske.

But, why now?

Norway’s Deputy Trade and Industry Minister Jof Jeanette Moen pointed out that over the past few years Indonesia had been the third-fastest growing economy after China and India within the prestigious Group of 20 major economies (G20).

“I think the future of the world will also be shaped by what happens to Indonesia and we want to play a part in that development”, Moen added.

Both the trade and industry minister and his deputy were among the main keynote speakers at a seminar in Oslo last Thursday on business opportunities in Indonesia

The meeting also presented Suryo Sulisto, chairman of the Indonesian Chamber of Commerce and Industry (Kadin), Indonesian Ambassador to Norway Esti Andayani and Ananda Idris, a consultant well experienced in dealing with Norwegian businesses.

The seminar, which was attended by about 50 businessmen from across Norway, some of whom already possess good experience of doing business in Indonesia, was part of a series of preparations for the vigorous campaign to enter Indonesia’s economy.

The next big step will be the opening of an Innovation Norway office in Jakarta in August, which will serve as the “man on the spot” in Indonesia to help Norwegian companies on how to market products and how to invest in Indonesia.

Innovation Norway, a state institution with offices in more than 30 countries, plays a unique role in promoting trade, investment, technology innovation and even tourism, serving as the spearhead to help Norwegian businesses market their products or set up investment ventures overseas.

As a state company funded by the central government and county administrations, Innovation Norway is able to hire highly competent professionals to produce market intelligence studies and provide advisory services and technical assistance.

“We can even provide financing services [both loans and equity capital] to businesses with highly promising prospects. Once we enter a company, we serve as the catalyst to attract other commercial banks into joining the financing” said Innovation Norway’s CEO, Gunn Ovesen.

Norway has always pursued a prudent economic vision. Even though it is one of the world’s largest producers of oil, producing more than 2.2 million barrels a day and more than 110 billion cubic meters of natural gas a year, the country generates more than 90 percent of its electricity from hydropower.

The government has been pouring a good portion of its oil and gas export earnings into what Norway’s Finance Ministry claims to be one of the largest sovereign-wealth funds in the world, with more than US$550 billion in reserves for investment both within the country and overseas.

“Norway is the world’s sixth-largest producer of hydropower in the world, supplying more than 95 percent of our domestic electricity consumption of over 250 terrawatt hours [TWh] last year,” said Geir Elsebutangen, managing director of INTPOW, a government research and development agency focusing on renewable energy.

Elsebutangen added that Norwegian companies had also developed advanced technology in tunneling work for hydropower generation stations and other basic infrastructure.

“For a few months every year, most of our rivers are frozen, yet our tunneling technology can guarantee a constant supply of water to our hydropower stations,” he sad.

Elsebutangen, who gained years of experience working with the ABB construction company in Indonesia and other Asian countries, sees many potential sites for hydropower plants in Indonesia, especially those of small capacity.

“Tinfos AS has completed a mini hydropower plant near Makassar, South Sulawesi, with a capacity of 10 megawatts [MW]. This plant can be a model for other areas to generate renewable energy, while serving as a showcase for the public to realize how vitally important it is to protect forests,” he added.

The “big bang” declaration of Norway’s entry into the Indonesian economy will be capped with a visit by a business delegation in late November during which Norwegian companies will show their competitive edge in hydrocarbon, marine and maritime services and hydropower, as they seek joint-venture partners.

Norway has a population of only around five million people, barely half the population of Jakarta, but with gross domestic product (GDP) of over $420 billion and per capita income of more than $55,000,
Norwegian consumers have strong purchasing power..

Unfortunately, however, Indonesia-Norway trade has not grown well and has so far failed to achieve its full potential. According to official data at the Trade and Industry Ministry in Oslo, bilateral trade totaled only about $260 million last year, down from $295 million in 2010, albeit up significantly from $195 million in 2009, mostly in Indonesia’s favor.

Indonesian exports to Norway have consisted mostly of garments and accessories, consumer electronic goods and wooden products, while imports have consisted primarily of machinery and fish.

But bilateral trade will increase substantially in the coming years as more Norwegian companies sell technology, marine and maritime services and equipment.

Last January, Norway’s Hoegh LNG, one of the world’s largest fully integrated floating liquefied natural gas companies, signed an agreement worth more than $250 million with state-owned PT Perusahaan Gas Negara (PGN) to provide PGN with a floating storage and regasification unit (FSRU) and mooring system in Lampung under a 20-year charter, which is due to begin operations in early 2014.