Star performer: New investment is anticipated for West Kalimantan

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Under the Indonesian Investment Coordinating Board’s (BKPM’s) regional development competition, the province of West Kalimantan was declared the best performing region in 2011. This was after the Bornean contender achieved some impressive GDP growth figures, while also making an important impact on its citizens’ earnings and employment prospects.

TOP OF THE LEAGUE: The Regional Champions (RC) programme seeks to funnel investment to seven provinces around the country, only one of which is on Java. The aim is to promote these as examples of regional development, showcasing what can be done when the private sector, national and local government and other local and international actors work together.

The promotion also involves an element of competition. The seven RCs are selected from among the 34 provinces according to their performance, with the most recent crop being Aceh, West Sumatra, Central Java, West Kalimantan, South Sulawesi, Central Sulawesi and North Sulawesi. The RC programme focuses on bringing strategic investments to the regional areas, throwing the central authorities’ weight behind their promotion, both domestically and internationally.

DIVERSITY & STRENGTH: The government named West Kalimantan as a regional champion for 2011 after it posted economic growth rising from 4.49% in 2008 to 6.89% by 2011. This was also accompanied by a drop in the unemployment rate, which fell from 11.1% to 8.5% in the same period. The province, known in Indonesian as Kalimantan Barat, is located in the western corner of the island of Borneo, bordering the eastern Malaysian state of Sarawak to its north-east. It is a region of geographical and ethnographic diversity.

The population, which the 2010 census recorded as 4.40m, is composed mainly of indigenous Dayak populations, ethnic Malays and ethnic Chinese. The capital, Pontianak, is the largest city, with a population of some 550,000, and is located on the Kapuas river delta.

Today, the province has five ports in addition to Pontianak, and seven airports. Administratively, the province is divided into 12 regencies and two cities, with Pontianak and Singkawang being the latter two.

Since receiving the award, the governor of West Kalimantan, Cornelis M H, was re-elected for a second term in September 2012. Success as a Regional Champion surely assisted in this, as Cornelis was able to point to the considerable economic gains that were realised under his first five-year term.

Partly responsible for this economic success is the province’s very active investment advocacy agency, the West Kalimantan Provincial Investment Coordinating Board (BPMD), led by Yoseph Alexander. According to the board’s figures, external investment in the province stood at Rp5trn ($500m) in 2008, before reaching Rp9trn ($900m) in the first half of 2011.

FOREIGN & LOCAL INTEREST: Investment continued in 2012 too, with foreign investment led by China and South Korea, according to Antara news reports. The BPMD announced in March 2012 that Chinese clients were deliberating on a Rp10trn ($1bn) investment in rubber plantations, involving some 100,000 ha, and a processing plant. In May 2012, another Chinese company, the Taida Group, was exploring the possibility of developing an iron ore mining operation in the region.

In addition to foreign interest in the province’s commodities, locals are also investing in West Kalimantan – and not just the large Indonesian corporates. Credit unions are thriving in the province, with 16 of the 100 largest savings and loans cooperatives in Indonesia based in West Kalimantan. A special bylaw has recently been passed to underwrite these, the largest of which is the Pancur Kasih Credit Union (PKCU). This had assets of Rp1.2trn ($120m) in 2012, with a membership of around 108,000. In 2012 the PKCU was also a winner – receiving the award for the largest amount of credit union capital from the ministry of cooperatives and small and medium-sized enterprises.

The citizens of West Kalimantan look both to foreign investors and to their own strengths for economic growth and development – a winning combination.

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The Report: Indonesia 2013

Regions chapter from The Report: Indonesia 2013

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