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Posted courtesy of thejakartapost.com: 
Riau Islands exploits Internet to woo foreign investment Indonesia’s economic success is one of many factors accelerating investor interest in Southeast Asia. This is a trend almost certain to accelerate as the region integrates, demonstrates superior growth, attractive cost and demographic fundamentals, and rising consumption and demand which complements its traditional export competitiveness. A desire to expand distribution in the face of economic weakness in the US, Japan and Europe and to diversify away from reliance on China-focused supply chains is also important. Located only 12 miles off the coast of Singapore, the Riau Islands, site of the Batam, Bintan and Karimun Free Trade Zones, has in recent decades attracted billions of dollars in foreign manufacturing, tourism, infrastructure, agriculture, shipbuilding and fisheries investment. Managing the information needed to service potential and existing investors is a complex task. For this reason the Riau Islands has taken a number of steps, including development of a new website. These initiatives provide insights and examples that will help other government and corporate entities in planning their own investment promotion and related marketing initiatives. Traditionally, investment promotion programs have focused on printed materials and occasional “road show” expeditions. Political leaders, bureaucrats and executives travel long distances to meet briefly with potential investors and executives. Unfortunately, these costly exercises often produce mixed results. This should not be surprising. If a US entity seeks a presence in Indonesia, they are not likely to succeed through occasional seminars and one-on-one meetings in Jakarta — regardless of the program or participants in attendance. Just as in Indonesia — relationships with foreign investors are developed over time. Fortunately, the Internet proves a valuable tool in maintaining contacts, giving depth and continuity to road show and other initiatives, enabling better returns on marketing, outreach and business development initiatives. Riau Islands province has taken major initiatives to develop numerous investment and trade promotion programs for government and corporate entities all over the world. With the help of a private company, the province develops a comprehensive program, which utilizes the Internet as a base from which to expand and facilitate their international outreach and investment promotion efforts. These include: First, research the competition: there are many FTZs in Asia. While few have realized the same level of foreign investment as those in the Riau Islands, many are more well-known and perceived to be more competitive. It was vital to conduct research and comparisons with other locations. Specific comparisons were made, benchmarks developed and strengths and weaknesses identified. Second, define competitive advantage: successful investment promotion programs move beyond slogans such as “Our Province is Right forYou” — which can be applied to every locality in the world. To provide investors and site locators with clear reason to pay attention, the Riau Islands was defined as the “Site of Southeast Asia’s Premier Free Trade Zones”. Other locations should also highlight core strengths. Java, for example, might focus on access to Indonesia’s growing domestic market; Bali on high-end international tourism and design; Kalimantan on energy, minerals and eco-tourism; and Sulawesi and Sumatra on agriculture and other relevant sectors. Third, target audience: investors tend to be specialized and provinces emphasizing tourism or agriculture need different approaches than those targeting on manufacturing and shipbuilding. The Riau Islands has strengths in all of these sectors so information was aggregated both on a geographic and sectoral basis to allow more focused review. Fourth, emphasize value over cost: business theory dictates one must compete on cost or value. The best strategies contain elements of both. To compete on price alone depresses margins. The ability of a province to attract investment without substantial incentives is largely determined by its ability to demonstrate real value. The Riau Islands took great care to emphasize its proximity to Singapore, which could not be replicated by competing locations, while also highlighting its cost competitiveness against markets such as China, Vietnam and India. Fifth, develop a cohesive program: successful investment promotion programs incorporate well-defined strategies within well-orchestrated, ongoing programs. In the case of the Riau Islands our website serves as a foundation providing data and an updateable resource. This allows investors to keep up with events in the province and to link together discrete, disconnected events, which by themselves lack the continuity and structure needed to nurture interest over the long term. Sixth, vision before details: to justify the considerable resources required to evaluate the feasibility of a project, an investor must first be convinced of the attractiveness of a location. As a result when inquiries are received and one-on-one meetings held, participants are generally better informed. This allows for more substantive discussion. But above all, a follow-up is essential. When speaking about foreign investors at a recent investment conference in Jakarta President Susilo Bambang Yudhoyono noted, “Too many problems are not resolved due to a lack of communication”. We would add too many deals never happen given the lack of proper follow-up. These are just a few of many issues considered during development of the Riau Islands strategy. Every province and municipality, however, is unique — and the points noted above are intended to provide insight into some of the considerations that must be examined when designing effective investment and trade promotion programs. The writer serves as president of KWR International, Inc., a consulting firm that specializes in Asia-focused trade, investment and business development. The opinions expressed are his own. |
