Indonesia seeks Indian investment to mine gold, refine crude oil

With a new government under Joko Widodo set to assume power in Jakarta, Indonesia is looking for big ticket Indian investors to mine gold and refine crude oil in the fourth most populous country in the world.

Indonesia is also targeting to increase bilateral trade with India from $16.99 billion in 2013 to $45 billion in 2015. “This is a tremendous achievement if we compare the figure of 2004 when it was only worth $4.5 billion,” Hariyanta Soetarto, Acting Consul-General of Indonesia, Mumbai, told Business Line here.

He said Jakarta is looking for investors to set up crude refineries in Java and Sumatra islands. “We are open to both 100 per cent investments and joint ventures,” he said.

Besides, Indonesia is inviting investments in mining of nickel, gold and copper. It is the ninth largest gold producer, accounting for four per cent of global production. The world’s largest gold reserves (67.4 million ounces) are believed to be at the country’s Grasberg mine. Due to a variety of reasons, production fell from 141 tonnes in 2003 to 97 tonnes in 2011. To augment this, the Government is looking for fresh investments and technology.

Indonesia has 3.6 billion barrels of proven crude oil reserves as of January 2014, down from 4 billion barrels a year ago. It was the world’s 24th largest crude oil producer, accounting for just 1 per cent of world production. The country’s total crude oil refining capacity in 2013 was 1.1 million barrels per day against a consumption of 1.5 million bpd.

Soetarto said the key challenge for the Government, especially in the oil and gas sector, is to balance exports with domestic needs. “Indonesia needs to build at least two new oil refineries. The cost to produce oil in 2009 was only $11.95 per barrel, better than industry average of $34.34.”

As the single largest holder of proven natural gas reserve in the Asia Pacific region, Indonesia is emerging as an important energy supplier to East Asian countries such as Japan, Korea and China. With reserves of 112 trillion cubic feet, Indonesia has expanded gas pipe network to neighbouring countries Singapore and Malaysia.

So far, Indonesian investments in India were about $612 million, as against Indian investment in Indonesia at only $64.9 million. China, Singapore, Japan and Korea have emerged as the biggest investors in Indonesia.

Similarly, in the bilateral trade in 2013, while Indonesian exports to India were worth $13.03 billion, imports were only worth $3.96 billion. “We want to improve bilateral trade with a balanced approach. Besides, we want direct trade between the two countries, and not via Singapore or Malaysia.”

As part of attempts to woo investment, Indonesian Ambassador to India Wilmar Rizali Indrakesuma met Gujarat Chief Minister Anandiben Patel and business and industry leaders last week. Besides, officials from the two countries have also identified 17 clusters, proposed to be signed up in a sister city arrangements.

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