Singapore manufacturers seek lifelines from East Java, Jakarta

 

Singapore’s economic growth is predicted to grow by 1.9 per cent this year, lower than last year’s 2.2 per cent, according to the latest survey carried out by the Monetary Authority of Singapore (MAS) in the first quarter of 2016.

 

As a result of the sluggish trend, players from the country’s manufacturing sector, one of the hardest-hit sectors, have intensified efforts to expand their business in the region, attempting to mull cooperation with manufacturers from Jakarta and Surabaya, respectively the first and second largest Indonesian cities. 

 

“We chose Surabaya and Jakarta because their economic growth is always above the national average,” Singapore Manufacturing Federation (SMF) president Douglas Foo said recently in Surabaya on the sidelines of the group’s meeting with the East Java provincial administration.

 

Representatives from dozens of Singaporean companies joined the delegation in a three-day visit to the two cities earlier this week.

 

“We [Singapore and Indonesia] can no longer rely on ourselves in the future,” Foo said. 

 

“Indonesia has abundant resources exported in the form of raw materials, so a collaboration is a right business model to perform by the two countries to capture a potential market more competitively,” Foo elaborated.

 

During their meeting in Surabaya, the capital of East Java province, the Singaporean businesspeople learned about the economic potential of East Java in a presentation by the provincial assistant secretary for economic affairs Hadi Prasetyo.

 

One delegation member, who represents an air-conditioner manufacturer, for example, expressed his company’s interest in working with a local partner to open up a new factory in East Java.

 

Singapore has become one of the main export destinations of East Java—after Japan, US, China, Taiwan and Malaysia—with gold, silver, metal, jewelry, cigarettes and palm oil as the main export commodities. Last year, the value of exports from East Java reached US$17.1 billion. 

 

Meanwhile, Deputy Chief of Mission at the Indonesian Embassy in Singapore, Ridwan Hassan, said that Singapore and Indonesia needed to complement each other. 

 

“Indonesia needs foreign investment to drive its economic development, while Singapore needs Indonesia to develop its business,” he said.

 

Hassan said that this cooperation was also an opportunity for Indonesian business players to team up with their Singaporean counterparts as both countries were facing the economic slowdown.

 

Data from the Investment Coordinating Board (BKPM) shows that Singapore was the largest contributor of foreign investment in Indonesia in 2015 with $5.9 billion, a 20 per cent share of the total foreign investment coming in last year. In 2014, the country invested $5.8 billion in Indonesia. 

 

Singapore’s manufacturing activity is at its lowest point since December 2012, as factory output, new orders and employment all fell last month, reported The Straits Times.

 

The Purchasing Managers’ Index (PMI) - an early indicator of manufacturing activity - contracted for the eighth straight month to post a reading of 48.5 in February, a level last seen in 2012.

 

A reading below 50 shows that more purchasing managers reported a deterioration in business than those noting an improvement.