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A global leader in power and automation technologies, ABB
(Asea Brown Boveri) is keen to deepen its footprint in Indonesia amid
signs, it claims, of significant improvements in the country's economy
and investment climate.
To support the execution of its global strategy, eight regions have
been created to manage business and functional roles effectively across
the world, as well as maximize synergies and ensure a more efficient
use of resources.
As part of this regional approach, ABB's India chief executive, Ravi
Uppal, who is also responsible for the South Asia-Pacific region,
visited Indonesia last week and spoke with The Jakarta Post to share
some of his insights, as well as the company's plans for Indonesia. The
following are excerpts from the discussion:
What insights have you gained upon visiting Indonesia? I'm very
encouraged to see the way the energy sector in Indonesia is growing now.
Indonesia has a total electricity capacity of about 26,000 megawatts
right now and the country plans on adding another 25,000 megawatts over
the next 10 to 20 years. So, this means that it wants to double its
capacity. Because Indonesia can see that there will be greater
construction activity, more industries will grow and living standards
of the people should go up.
In the past, the nation was doing this on its own, but now the time has
come for the effort to be shared with the private sector. This is why
they are inviting entrepreneurs from Indonesia and from outside to come
here and set up the power generation infrastructure, which is based on
coal and gas.
The government is going to invest a huge amount of money, of which
about 40 percent will be spent on power generation and 60 percent on
transmission and distribution.
With this kind of investment coming in, it brings a lot of promise to a
company like ABB because this is our strength. ABB has been in this
country for more than 40 years. We have a long history in this country
and we would like to take it forward.
ABB's total assets stored in this country are worth over US$1 billion.
So you can understand that we have historically had a very substantial
presence and would like to take it forward now.
We have nearly 450 people working for ABB in Indonesia. We are doing
business at the moment worth about US$150 million in total.
What are your current and future projects with the state-owned
electricity company PLN? There is going to be demand for a transmission
and distribution network from PLN. There will also be some power plants
that will be set up by PLN and in this process we will have a role in
providing products and solutions.
There are some contracts and inquiries in the pipeline. So during the
course of the year we believe there will be more prospects that can be
used in our favor. We look forward to that.
Apart from those with PLN, are there any other projects you are aiming
to set up? Indonesia is set to invest a lot of money not only in oil
and gas power plants. We have a valuable offer to make in the oil and
gas sectors. There are many oil fields being developed by private
companies, which we are also connected with and have made valuable
offers to.
Other sectors that we have a dominating presence in are the pulp and
paper industries. As you know, Indonesia is a large producer and
exporter of pulp and paper.
For the manufacturing of pulp and paper we supply complete electrical
systems, complete automation systems and quality control systems. So,
all the major companies you know of in this industry have ABB products,
which we are very proud of.
As you may know, Indonesia's cement industry is growing because of
growth in construction. Because of this, we also play a large role in
supplying the complete electrical systems and automation systems to
cement companies.
ABB is a market and technology leader in both the power and automation
industries here. We are very proud that we have brought many new
technologies to Indonesia and are intent on also bringing new
technologies for use in the oil and gas sectors in the future.
What is your strategy for making the most of the opportunities at hand?
First, we would like to crease a strong local footprint. We would like
to augment this by taking more people on board, training them
intensively, building their competence and also increasing our local
manufacturing presence.
We may invest on our own or in the form of a joint venture to
manufacture more products locally this year.
We are talking about the future here. New productions should include
electrical products, ranging from switch gears and transformers to
low-voltage distribution products. There are several types of other
products, but basically electrical equipment.
We are starting that this year. This year we will finalize our plans
and start executing them.
What is the role of the ABB Indonesia the Asia Pacific region?
Indonesia is an integral part in the South Asia-Pacific region for ABB.
We are using it as a regional center for these synergies, which have
been prepared in different countries. For example, when it comes to
increasing competency, we have a regional team for that.
For market development, we use resources within the region by
implementing customer education and exposing the market to new
technologies.
When building internal systems we use a common regional force to bring
a common system to all the countries involved. So I think there are
many instances in which we share our resources, rather than letting
every country use only its own. We now have a regional force to help
bring every country to the same level.
This is a model of synergy that we are ready to use.
What are the challenges for ABB's operations in Indonesia? Challenges
always lie in building up the local talent pool. We should be able to
train them very fast, building competency to execute our new projects
with speed.
Every country has a bureaucracy. Indonesia to my knowledge is no
exception. Some places are more bureaucratic, others less. I think in
every country you go through different moods. There is a mood where
nobody wants to invest, instead preferring to watch, just as there is
the mood in which everybody wants to invest.
I think Indonesia is gradually moving to a stage where people want to
invest. They want to invest now. They think the economy is looking
good, Indonesia's rupiah is growing stronger, inflation is coming down
and everything is moving in the right direction.
I'm not too concerned about the bureaucracy. I'm very assured that
Indonesia is going to be one of our highest growth regions as we go
forward. I think that things are going to change for the better in
Indonesia.
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