GE eyes Indonesian energy, water treatment projects

Ary Hermawan, The Jakarta Post, Jakarta

General Electric, the widely diversified U.S.-based global conglomerate, is upbeat about the global business environment, saying that 2007 will be the first year that businesses outside the U.S. will account for a higher proportion of its revenues than that of its base.

In that regard, the company plans to double its business in Southeast Asia within the next three years, with Indonesia and Vietnam targeted as its new stars of growth after Thailand, which now contributes about 35 percent of the region's revenue.

GE, which has run businesses since the 1930s in Indonesia and invested about US$700 million in such sectors as financial services, aviation, locomotives, healthcare and energy, is eying 25 percent growth in the country this year. The company gains about US$400 million in revenue annually from the country.

It is also hopeful that it can participate in government infrastructure projects, including the planned installment of 10,000 megawatt power plants and water treatment facilities.

During a GE Day exhibition in Bangkok recently, a small group of Indonesian journalists, spoke with GE International president and CEO Nani Becalli-Falco about business prospects in Indonesia. He is responsible for directing GE's strategies for growth outside the United States. Indonesia is the largest economy in Southeast Asia and it now plans to build more power plants to help accelerate growth while it is also committed to providing clean water for all its citizens. What do you think about this opportunity? The things you have mentioned are the things we are particularly strong in: water treatment and the oil and gas industry. Infrastructure business opportunities are really things that we are particularly strong in. And that's where we want to develop and participate.

Now, Indonesia is the largest and a very important economic entity in Southeast Asia. I believe that there is a resurgence of Indonesia.

There were a lot of manufacturers in Indonesia before they went to China and now they have started thinking of coming back to Indonesia. So I would say the prospects for the future of the country are promising. The price of the technology offered by GE is said to be expensive. The cost of the coal-gasification technology for instance is 30 percent higher than the conventional coal-burning technology. What's your take on this? The coal-fired power plant is definitely cheaper, but on the other side, it doesn't meet the requirements for environmental protection. So GE is really working on many parts of technology that are perhaps more expensive on one side, but they are on the other side certainly taking care of the environment.

Apart from the gas, we're developing nuclear energy, that is very important. And today, I would say nuclear is the technology that offers the best compromise between cheap energy and respect for the environment. The Indonesian government is also planning to build a nuclear power plant in 2011. It's going to be difficult to have a nuclear power plant by 2011 unless something has already started being organized quickly.

It's difficult because of the process of technology pertaining to its installation, the execution of the project as well as the whole process of permits and rules behind the installation of a nuclear facility.

2011 is a very aggressive date. Hopefully, it can be done. We are one of the biggest providers of nuclear technology in the world. How much investment is required to build a nuclear power facility? I can relate to the number of the most recent nuclear power plant that we commissioned, which went for a bit over US$1.4 billion. It can produce electricity of about 1,600 megawatts. Many people are worried about maintaining the technology of a nuclear power facility. Well, it needs training. This is one reason that 2011 is a very aggressive date. Because you need to have a large team of people who are well trained to operate those kind of facilities. And that training does not happen in a short period of time.

But I hope it's going to be short. How do you see the economy globally and in the ASEAN region in particular in the next few years? We are enjoying a period of time of exceptional growth in the world, which is driven by the reallocation of wealth into countries that are rich in natural sources of minerals, oil and gas.

And it also goes to countries with a lot of people. Consequently, countries like China and the group of Southeast Asia, which has about five hundred million people, are now economies with the possibility of growing very fast. China is growing at 11 percent, India is growing at 9 percent, overall Southeast Asia is growing at 6 percent, and so on.

Despite the fact that we have experience in raw material increases, such as in oil and gas and iron, we have never experienced something like this in the past; the economy in the world continues to grow very quickly.

You are too young to remember that in 1984, when there was the first oil crisis, when the price of oil didn't even reach the price it is today, the whole economy of the world stopped. Today we're experiencing the opposite, the prices are going up and staying up and the economy keeps growing.

It is because of the phenomena of the redistribution of world's wealth and these countries (such as China and India) are becoming powerful economic entities. As you can see everybody is benefiting in this overall world growth.

In this context, you can imagine that a country like Indonesia, with about 220 people, is a country in a very good position to grow. GE is eying 20 to 25 percent growth in Indonesia in 2007 How do you plan to do that? A lot of work, a lot of sweat and a lot of customer contact.
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