Indonesia Spurns Investment in Burma over Rohingya Crisis

By Tito Summa Siahaan 7 September 2012

Violence against Burma’s Rohingya people has prompted Indonesia to delay its efforts to encourage the archipelago’s state enterprises to seek business opportunities in the emerging Southeast Asian nation.

Indonesia earlier this year announced plans to establish an office in Burma [Myanmar] to assist Indonesian state-controlled companies, but State Enterprises Minister Dahlan Iskan on Wednesday revealed that proposal had been delayed.

“The staff had been prepared and the office was supposed to be opened last month, but we delayed due to the Rohingya situation. Hopefully it will open next month,” Dahlan said.

Burma has in the past two years made apparent progress toward democracy following the two-decade rule of a military junta. But in recent months, an outbreak of violence in the Rakhine region in which the local Muslim minority was apparently targeted by Buddhists, attracted international attention.

Many Indonesian companies have expressed interest in doing business in Burma, which is in the process of liberalizing its investment laws to rejuvenate its stagnant economy.

Among the state-controlled Indonesian companies eyeing opportunities are Bank Negara Indonesia, construction firm Wijaya Karya, cement firm Semen Gresik and energy company Pertamina.

Pertamina is keen to access Burma’s large untapped energy sources. Proven oil reserves stand at 3.2 billion barrels and gas reserves at 11.8 trillion cubic feet.

Salis Aprilian, president director of Pertamina subsidiary Pertamina Hulu Energi, said Burma offers an abundance of opportunities for Indonesian state enterprises because the country has little infrastructure. “Burma reminds me of Indonesia back in the ’60s,” he added, referring to the early period of Indonesia’s economic boom funded by oil and gas exports.

Salis said Indonesia could follow China’s approach to assisting state companies succeed abroad. “China used oil companies first, which were then followed by other sectors like infrastructure,” he added.

Pertamina president director Karen Agustiawan said her company was planning to expand in Burma, but was waiting for the United States to lift its economic sanctions on the Southeast Asia country.

Dahlan, however, stood by Indonesia’s state-enterprises push in Burma, noting that the United States has loosened its sanctions.

The US has left in place some of the sanctions it imposed.