Multinational businesses cannot be separated from efficient banking and logistics support. Understanding of integrated banking and logistics services is a game-changing factor, which determines the growth of investment in other countries. The International Conference of Chinese Companies in Indonesia 2023 (IC3 Indonesia 2023) was hosted by SW Indonesia, in collaboration with Bank ICBC Indonesia and the Association of Indonesian Bonded Logistics Centers (PPLBI).
- Investment Prospects in Indonesia and China's Role
- Role of Banking and Logistics Sectors in Investment Growth
- Logistics Efficiency and Indonesia's Vision
- Leadership Insights and Future Outlook
Bank ICBC Indonesia was represented by Director Liu Hongbo and PPLBI represented by Chairwoman Utami Prasetiawati, as a speaker at IC3 Indonesia 2023, which was held on May 26 2023 at the Mandarin Oriental Jakarta Hotel. IC3 Indonesia 2023 was attended by 168 people from the representative of top management of Chinese companies in Indonesia. Director Liu Hongbo and Chair Utami shared their insights in the Language of Chinese and Indonesian, which were loaded with practical examples in the field.
Investment Prospects in Indonesia and China’s Role
Indonesia is known as one of the countries with the best strategic investment prospects in the world. In addition to its abundant natural resources, Indonesia is known for its favorable economic conditions, which are expected to improve further. This can be seen from economic indicators such as controlled inflation, post-COVID-19 economic resilience, and consistently rising Purchasing Manager Index (PMI) and Customer Price Index (CPI), among other aspects.
Role of Banking and Logistics Sectors in Investment Growth
China, known as the new economic giant, is the second-largest foreign investor country in Indonesia after Singapore. It should be noted that many Singapore companies that invest in Indonesia are subsidiaries of Chinese companies. Several strategic projects have been developed in order to reach 6,000 projects in the first quarter of 2023, including those in the infrastructure, mining, and digital economy sectors. Several strategic projects have been developed in order to reach 6,000 projects in the first quarter of 2023, including those in the infrastructure, mining, and digital economy sectors.
To support the growth of Chinese investment in Indonesia, various sectors must play an important role in the successful establishment of related sector enterprises. The banking sector is regarded as one of the most important, with banks serving as a source of alternative financing for major investment projects in Indonesia. Furthermore, the logistics sector is included as another critical sector for effectively and efficiently supporting supply chains for project needs.
Banking Sector’s Contribution to Investment Facilitation
The banking sector can assist foreign investments, particularly Chinese investments, in terms of financing as well as efficiency. Several alternatives that can be considered are Cross Border Direct Loans and E-Supply Chain Finance. Cross Border Loans enable Chinese investors to obtain effective and efficient funding from Local Currency Settlement (LCS), which is the settlement of transactions in Rupiah and Yuan currencies by a bank designated as a Cross-Currency Dealer (Appointed Cross Currency Dealer, ACCD).
E-Supply Chain Finance allows forward and backward supply chain integration to receive loans online that conduct transactions with major companies. This service facilitates transactions and ensures the credibility of major corporations for related payments.
ICBC Indonesia Bank’s Pioneering Role
All that funding is provided and facilitated by ICBC Indonesia Bank. ICBC saw opportunities to serve strategic investments in Indonesia and decided to open the country’s first cross-country branch through the first-ever acquisition scheme. This preparation is supported by the Global Cash Management (GCM) service, which allows multinational companies to conduct transactions through ICBC Indonesia Bank.
Furthermore, Bank ICBC Indonesia also offers virtual account services to help businesses record payments received from clients. ICBC Indonesia also facilitates customers with three-currency debit cards (IDR, CNY, and USD), which provide ease in transactions for individuals with high mobility.
Logistics Efficiency and Indonesia’s Vision
In terms of logistics, the government also supported foreign investment in Indonesia through the inauguration of the Bonded Logistics Center (PLB) in 2016. This serves as a solution for companies engaged in the trade sector, particularly international trade involving export and import schemes, to achieve national logistics efficiency. This inauguration also aligns with Indonesia’s vision of becoming an Asia-Pacific logistics hub.
PLB’s Impact on Logistics Efficiency
PLB enables logistics cost efficiency for business operators in Indonesia, including detention, demurrage, and port-of-charge costs. There are additional costs for the company in the logistics process if the packaging, disassembly, and opening of the box exceed the time period specified by the logistics service provider. These costs frequently contribute to a company’s high logistics costs. With the use of PLB, the company can store goods in warehouses for a maximum of three years, saving up to 27% on logistics costs.
Enhancing Cash Flow Management Through PLB
In addition to cost efficiency, the use of PLB allows the company to better manage its cash flow. In general, goods that were imported and arrived in Indonesia are assumed to have left the country of origin, so the company must immediately take care of licenses, customs payments, and related taxes. Goods stored in PLB warehouses are treated as if they are still in the country of origin, allowing the company to manage customs and related taxes alongside the management of goods in the PLB.
Flexibility and Risk Mitigation Through PLB
The use of PLB provides companies with flexibility when conducting international trade activities. PLB enables businesses to carry out a combination of exports of goods received from various business operators, both national and international, and simple repairs required prior to delivery to the target party. Furthermore, the goods that have entered the PLB are not subject to the risk of regulatory changes, lowering the risk of uncertainty.
Leadership Insights and Future Outlook
PLB’s role as an integration of the supply chain in logistics in Indonesia was described by Utami Prasetiawati, the head of the Indonesian Logistics Center Association (PPLBI). She emphasized the significance of foreign investments that are supported by the national logistics system, which is currently in the process of supporting an effective and efficient logistical system. This includes avoiding hidden costs that may arise in a specific geographical environment.
With the experience of leading companies focusing on integrated value chains and value-added logistics services, such as PT Transcon Indonesia, the logistics process in Indonesia has become much simpler to understand. President Utami shared her experience when she was assisting investors with logistics issues and projects related to renewable energy, mining, construction, infrastructure, and other unique industries with distinct characteristics.
Future Direction of IC3 Indonesia
In addition to Director Liu Hongbo and President Utami, this international conference features the former Minister of Finance of the Republic of Indonesia, Prof. Bambang P.S. Brodjonegoro, and SW International Chairman Zhang Ke as key speakers. The opening of IC3 Indonesia 2023 began with a welcome speech from the Head of SW Indonesian Branch in Surabaya, Ronny Budisantoso, and ended with panel discussions led by SW International Business Development Partner Leanne Liang and SW Indonesia Tax Partner Leader Meliana Djajakarto.
The panelists on the conference stage are top management representatives from Chinese companies in Indonesia. The leaders of the Bank of China, China’s largest cement and steel company, spoke at the panel discussion. This is an example of SW Indonesia’s commitment to assisting Chinese companies in their development and growth. With the support of SW International and SW China, the International Conference of Chinese Companies in Indonesia (IC3 Indonesia) will become a regular annual agenda item in the coming years.
Unlock the potential of your international endeavors with the expertise of SW Indonesia. Our team is dedicated to empowering your business through comprehensive solutions in banking and logistics. Whether you require financial support, logistics optimization, or strategic guidance, we’re here to elevate your success. Contact us today at +62 2993 2132 or email us at [email protected] to embark on a journey of seamless international growth powered by SW Indonesia.