BILATERAL TIES WITH INDONESIA

Mr R. Sinnakaruppan asked the Prime Minister, in view of Indonesia's present political stability and international confidence, whether there are specific plans for Singapore to strengthen bilateral ties and play a catalyst role to assist Indonesia's economic recovery through significant investments in Indonesia.

Mr R. Sinnakaruppan (Kreta Ayer-Tanglin): Sir, before I ask my question, I would like to declare my interest, if any, that I work for a group of companies that has interests in Indonesia. Question No. 1, Sir.

The Minister for Foreign Affairs (Prof. S. Jayakumar) (for the Prime Minister): Mr Speaker, Sir, if I am not mistaken, the Member had filed the Question before the official visit of the Indonesian President but since then the Prime Minister Mr Goh Chok Tong has set out Singapore's views on the subject quite fully when President Abdurrahman Wahid made his official visit to Singapore on 6thNovember 1999.

Indonesia is one of our closest neighbours and a major trading partner. We would like to see a prosperous and stable Indonesia. We are ready to work with Indonesia to assist in its economic recovery. Singapore is a small country and our contribution can only be modest. However, Singapore can play a catalytic role to help restore investor confidence through practical measures.

Our existing cooperation platforms can be leveraged to help Indonesia achieve early results in bringing back investor confidence. In particular, we can focus on the Riau cooperation projects, which are symbols of the close bilateral cooperation between Indonesia and Singapore. These projects have withstood the regional crisis. But their potential has not been fully realised. We can explore how the Riau cooperation projects can be further expanded to bring in more foreign investments into the Riau islands - Batam, Bintan and Karimun. This would have a demonstrative effect on international investor confidence for the rest of Indonesia.

President Abdurrahman Wahid disclosed in Singapore that Indonesia was thinking of turning Batam into a Free Trade Zone (FTZ). We believe this is a good idea. Batam will then be on par with Singapore because Singapore is also a free trade zone. This will increase Batam's attractiveness for foreign investments and create more employment opportunities for Indonesians.

Singapore can also work with Indonesia to intensify tourism cooperation. Indonesia's tourism potential is enormous and we are prepared to work with Indonesia to re-launch the Indonesia-Singapore Tourism Cooperation programme. Apart from bringing in foreign exchange and creating jobs, there will also be positive spin-offs for the other sectors and industries in Indonesia.

In the coming months, we will have close consultations with the Indonesian government on these ideas. Prime Minister Goh has announced that he will lead a business delegation to Indonesia sometime early next year. To lay the groundwork for the Prime Minister's visit, Mr Philip Yeo, Chairman EDB, will lead a delegation of senior officials to Jakarta at the end of this month to hold discussions with the Indonesian authorities.

Mr Sinnakaruppan: Sir, I would like to find out whether there is a possibility of setting up a Singapore-Indonesia Business Council, as we have done for bilateral business relationships with other countries.

Prof. Jayakumar: Sir, I would not like at this stage to anticipate too much and try to predict the various outcomes. Let us wait for the mission to be led by Mr Philip Yeo to go and assess the situation. This was the first meeting at the Heads of Government level with the new President. The key, as we have said in many statements issued, is really the restoration of investor confidence, stability and to restore the linkages between the private sector.

The question of what kind of mechanism, whether Business Council or otherwise, of course can be explored if and when this question arises later. But at the moment I think the area that we have pinpointed, such as restoring of stability and investor confidence, is the key. The form and the instrument may be looked at later.

Mr Tay Beng Chuan (Nominated Member): Sir, would the Minister update the House on the Singapore-Indonesia Bilateral Trade Finance Guarantee (BTFG) scheme proposed by Singapore in 1998 to help restore established trade between Singapore and Indonesia?

Prof. Jayakumar: Sir, I think the Member would have read that this proposal has not been acceptable to the Indonesians because the conditions and safeguards which we have proposed were, in their view, not agreeable. So this proposal has not been taken up.

Mr Simon S. C. Tay (Nominated Member): Sir, in this regard, does the Minister see that there is a window of opportunity for better relations and that in this relationship improvements can be made in terms of governance and rule of law to attract more investors?

Prof. Jayakumar: I am not sure if I understood the thrust of his question. But if his question is that this is a good window of opportunity during which to work with the Indonesian government to improve bilateral and economic relations, the answer is, as we have said, yes because the new government is, in our view, the best possible team in the circumstances. They have both legitimacy and moral authority and during the discussions that took place here as well as in the press conference, President Abdurrahman Wahid made it clear that he is intent on restoring investor confidence and bringing about stability in Indonesia.

Mr J. B. Jeyaretnam (Non-Constituency Member): May I ask the Minister, digressing a little from the economic ties and cooperation, whether there are any lessons for Singapore to be learned from the political transition that has taken place in Indonesia?

Prof. Jayakumar: The lesson to all is that Singapore's policies, both economic and political, and the policy of social cohesion and integration which this Government has pursued since independence have worked for Singapore and all of us, both the Government and the people of Singapore, must ensure rigorously that these policies are supported and continue to work in Singapore. This has kept Singapore going despite enormous obstacles, including the financial crisis and the lesson to be learned from what is happening in the rest of the region is that when we have a good formula and recipe for Singapore's success, let us all work together to make sure that it is not in any way undermined.

Mr Jeyaretnam: Sir, does the Government appreciate that Indonesia has opened up a host of freedoms for the people which may lead to Indonesia becoming a democracy? Does Singapore intend to follow in that lead or not?

Prof. Jayakumar: Mr Speaker, Sir, I humoured him by giving an answer to a question which was really off the point in my view, but his further question would be a repetition of what I believe he is going to raise in his motion which is tabled for consideration in this House later.