Bloomberg
Immelt Wants Obama to ‘Sell Hard’ When in Indonesia (Update2)
March 18, 2010, 5:02 PM EDT
GE Tells Obama ‘Sell Hard’ in Indonesia With China in Pursuit
By Daniel Ten Kate and Stuart Biggs
March 18 (Bloomberg) -- General Electric Co. Chief Executive Jeffrey Immelt wants Barack Obama to “sell hard” in Indonesia as he extols U.S. expertise in industries such as clean energy. He may have to play catch-up -- Premier Wen Jiabao will make China’s sales pitch in Jakarta next month.
President Obama’s trip to his childhood home, which has now been delayed until at least June, will be key to a pledge to boost U.S. exports and “lead the global economy” in providing alternatives to fossil fuels. Southeast Asia’s biggest economy, which Immelt included last week among nations that may provide the growth “surprise” of the next decade, has the world’s largest geothermal reserves.
Winning orders for plants that harness the earth’s heat to produce electricity is a test of the U.S.’s ability to compete with China for exports in a region where its investments lag the European Union and Japan. China profited from Indonesia’s earlier energy needs, supplying coal-fired plants in the last decade, said Ravi Krishnaswamy, Singapore-based Asia-Pacific director for Frost & Sullivan, an energy consultancy.
“It’s sort of scary because China has moved so quickly and they’ve been so efficient in developing their industry,” said Peter du Pont, who runs an Asia clean-energy program in Bangkok funded by the U.S. Agency for International Development. The U.S. risks “losing whole markets if they’re not active,” he said.
‘Ring of Fire’
Indonesia’s more than 17,000 islands straddle the Pacific’s “ring of fire” of active volcanoes, providing a key source of energy. Chevron Corp., Houston-based Halliburton Co. and Osaka- based Itochu Corp. are among companies that will sponsor the World Geothermal Congress on the resort island of Bali next month.
Indonesia was Asia’s third-fastest growing economy behind China and India last year. The government of President Susilo Bambang Yudhoyono plans to spend $17.3 billion to meet power demand by adding 10,000 megawatts of capacity -- equivalent to 10 nuclear plants -- with more than half coming from cleaner sources including geothermal energy.
Trip Postponed
Obama’s visit, originally scheduled for next week, is being postponed because of this weekend’s vote in Congress on his health care plan, White House press secretary Robert Gibbs said today. The president will try to reschedule the trip for June, Gibbs said.
The delay will mean that issues of trade and investment between the U.S. and Indonesia will just “stay on the table,” said Murray Hiebert, senior director for Asia at the U.S. Chamber of Commerce in Washington.
“The business community was hoping it would give him an opportunity” to raise the question of investment barriers, Hiebert said in an interview.
Still, U.S. businesses competing in Indonesia won’t be harmed by the delay in Obama’s visit because most Indonesians will understand the reason for it, said Michael Orgill, manager for Indonesia at the U.S.-ASEAN Business Council in Washington. “They understand the domestic politics of what’s going on here in terms of health care,” he said.
The Obama visit will be preceded in May by U.S. Commerce Secretary Gary Locke’s trade missions to Indonesia and China. “Indonesia is going to be a vast, steady market for green technologies,” Locke said in a speech in Washington yesterday. “There are regional neighbors, for instance, like China and India that are racing with us to meet Indonesia and the world’s demand for renewable energy.”
Wen is set to make his first visit to Indonesia in April, according to Indonesia’s Foreign Ministry.
“In a time when millions of Americans are out of work, boosting our exports is a short-term imperative,” Obama said last week at the annual meeting of the U.S. Export-Import Bank in Washington.
U.S. Too ‘Timid’
Speaking at the same conference, Immelt faulted the U.S. government for being too “timid” on selling exports. He urged Obama to push the company’s freight locomotives, telling him to “sell hard.”
GE is involved in projects in Indonesia ranging from geothermal plants to turning landfill waste to energy, said Gatot Prawiro, GE Energy’s power & water growth director for the country. Indonesia’s demand for power has outpaced generation by 8 percent a year for the past decade, Prawiro said in an e-mail, citing the state power utility.
“At GE, we believe that a large part of this demand can be met by cleaner energy,” he said, adding that Indonesia must clarify regulations to facilitate investment.
Geothermal Plant
Five months ago, Fairfield-Connecticut-based GE loaned $50 million to a subsidiary of Indonesian energy developer Star Energy to help finance a 220-megawatt geothermal plant in Java.
America’s largest companies are seeking to gain a foothold, judging from a U.S.-Asean Business Council trade mission to Indonesia in January. The trip included 62 executives from 27 businesses, including Atlanta-based Coca-Cola Co. and Redmond, Washington-based Microsoft Corp., who sought opportunities in communications, energy and health, Michael Orgill, the council’s manager for Indonesia, said in an interview.
Climate change and clean energy are part of a “comprehensive partnership” that Obama plans to sign with Yudhoyono. The accord also aims to strengthen democracy in the world’s biggest Muslim nation and improve security ties as Indonesia fights terrorists who bombed luxury hotels and tourist spots, including Bali, in the past decade.
‘Comparative Advantage’
“Our two presidents are somewhat likeminded on climate change,” Indonesian Trade Minister Mari Pangestu said in a Feb. 28 interview. “We believe the U.S. has a comparative advantage in a lot of the renewable energy areas, so we hope there can be investments.”
San Ramon, California-based Chevron already manages two geothermal projects in Indonesia and is considering a third.
“The international community is coming to believe that Indonesia is seeing a turnaround,” Krishnaswamy said. “It’s too big a market to ignore.”
Indonesia’s gross domestic product rose 4.5 percent last year and the benchmark stock index increased 123 percent in dollar terms, making it Asia’s best performer.
The U.S. share of foreign direct investment in the Association of Southeast Asian Nations fell to 5 percent in 2008 from 28 percent a decade ago. The U.S. invested $3.01 billion in Asean in 2008, compared with the European Union’s $13.1 billion and Japan’s $7.16 billion, the group’s statistics show.
--With assistance from Mark Drajem, Hans Nichols and Roger Runningen in Washington and Greg Ahlstrand in Jakarta. Editors: Patrick Harrington, Ken Fireman, Ann Hughey.
To contact the reporter on this story: Daniel Ten Kate in Bangkok at dtenkate@bloomberg.net
To contact the editor responsible for this story: Bill Austin at billaustin@bloomberg.net
