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NUMBERS GAME: Malaysian businesses should look to the fast-growing provinces of Indonesia
IN the wee hours of Sunday morning a fortnight ago, I made my way to the Low-Cost Carrier Terminal (LCCT) to board the first flight to Surabaya.
The 21/2-hour journey on AirAsia was one of its five daily flights from Kuala Lumpur to Indonesia's second largest city. Surprisingly, it was my first trip to Indonesia this year. Last year, I made three trips to our neighbouring country to attend Asean-ministerial meetings (Indonesia had chaired Asean in 2011) as well as visiting the provinces to promote Malaysian interests.
In my second visit to Surabaya in the past year, I was surprised to observe the changes to the city's landscape. Apart from the rapid development of concrete jungle along the highway from the airport to the hotel, I was impressed by the shady trees lining the road dividers and the green pockets sprouting across the city.
I was informed that the city's mayor, Ibu Tri Rismaharini, a former city planner and architect by training, had made it her personal mission to make the city greener. Indeed, those who have visited other parts of the republic will agree that Surabaya is one of Indonesia's neater urban centres despite being home to 2.6 million people and nearly six million inhabitants in the metropolitan area.
It is also the capital of East Java, the second most populous out of the republic's 33 provinces -- with 38 million people, which is almost 40 per cent more than Malaysia's population. The size of the economy last year was US$120 billion (RM366 billion) and it grew by 7.2 per cent -- more than the national average of 6.5 per cent.
One of my first stops was at the headquarters of Indonesia's largest newspaper group in Indonesia, JawaPos at Graha Pena. I was received by the group's editor-in-chief and director, Pak Leak Kustiya for a tour of the facilities and a discussion with senior editors. JawaPos, which boasts a circulation of 1.2 million daily, is published in Surabaya and it is the most dominant newspaper outside Jakarta.
Moreover, the editors of this newspaper group are all youthful and energetic, and they have a good working knowledge of Malaysia and in particular of bordering states like Sabah.
Surabaya and East Java are widely known as a manufacturing, agriculture and fisheries centre and one of Indonesia's largest trading provinces. Last year, eight per cent of its total non-oil and gas exports went to Malaysia, the fourth ranked destination after Japan, China and the United States.
Realising the ample opportunity that Surabaya has to offer, I assembled a business delegation of 26 entrepreneurs from 18 small and medium enterprises (SMEs) under SME Corp Malaysia and the Halal Development Corporation (HDC). They are from different sectors, ranging from the food-based sector, cosmetics and logistics to packaging.
My objective in bringing this delegation is to promote the Malaysian SMEs as well as the halal industry to the Indonesian market.
One of the highlights of this trip was the one-to-one business matching sessions. A total of 47 matching sessions were conducted with entrepreneurs under Kamar Dagang dan Industri (Kadin) and Himpunan Pengusaha Muda Indonesia (Hipmi) and I was informed that potential sales of more than RM6 million were concluded in that short span of time. I'm sure if time was on our side, more sales could have been concluded.
This success confirms that Malaysian SMEs have the potential to be regionally competitive. For example, one SME managed to export frozen vegetarian patties or burgers to Surabaya. This may be a beginning of bigger things in store for this SME. I am not surprised that later, our nasi dagang, daging salai or mee bandung will find its way to the shores of Indonesia.
In the meeting with Hipmi, I was honoured that the secretary-general, Raja Sapta Oktohari, whom I had met in a conference in Bali last year, flew from Jakarta just for the meeting.
Indeed, the national Hipmi has been building stronger ties with their Malaysian counterparts since 2005 and many of the members are familiar with shopping malls, schools and hospitals in Kuala Lumpur, Penang and Malacca.
However, in a separate meeting with second generation high net-worth business families, I was surprised to learn that at least half of the attendees had not set foot in Malaysia. I have duly extended the invitation to these business groups so they could learn more about the economic opportunities and meet with our business community.
Later in the evening, I hosted a networking dinner with East Java’s Chinese Chamber of Commerce (Perpit). The response was overwhelming — about 100 ethnic Chinese businessmen and women came to network with 30 from our side. As the hall was packed,some guests had to sit outside the hall.
The same thing happened at another meeting the next day — with the Indonesian Kadin of East Java and Surabaya. The number of businessmen who turned up surpassed our expectations, and a large number had to be on their feet throughout the two-hour business networking meeting. Indeed, Indonesia is a numbers game.
As part of my working visit, I paid a courtesy call to the governor’s office. I was welcomed by the insightful, witty and charismatic vice-governor, Saifullah Yusuf, fondly known as Gus Ipul, the nephew of former president Abdurrahman Wahid or Gus Dur.
In his presentation, he noted that due to the decentralisation, the inter-province competition for investments has heightened. East Java, which has a competitive advantage in manufacturing and agriculture seeks to engage a wider pool of investors globally for investments as it seeks to position itself as the premier economic hub of East Indonesia.
The 36-hour trip to Surabaya reminded me of the importance of tapping the opportunities in the fast-growing provinces of Indonesia. Major cities in Indonesia are not more than three hours away from Kuala Lumpur by air and endowed with generous market size.
East Java is like California — it is big and strong, and a giant stand-alone economy. Indeed, as Jakarta hotel lobbies are crowded with the suit-and-tie-wearing big investors from China, India and the US, we Malaysians must strategically look outside; for indeed, the “game” is in the provinces.