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SEA Games showcase South Sumatra's investment potential

Article - April 4, 2012
The province of South Sumatra is rich in natural resources but it needs investors to help it make use of them to create jobs and increase the prosperity of the people
When it was decided to hold the 2011 biannual Southeast Asian Games, the second largest global multi-sports event after the Olympics, in Indonesia, the obvious choice for the host city would have been the national capital, Jakarta.

In fact, however, for 12 days in November the eyes of millions were on Palembang, the capital of South Sumatra, which staged both the spectacular opening and closing ceremonies – complete with fireworks, hi-tech special effects, and thousands of dancers and singers – in its Gelora Bumi Sriwijaya Stadium, and also provided venues for 296 of the 562 events.

Dubbed the biggest SEA Games ever, the event involved 5,000 athletes and sports coaches from 11 countries competing in 42 sports.

The worldwide attention focused on Palembang as the main host city was a personal triumph for Alex Noerdin, Governor of South Sumatra. Only two cities other than national capitals have ever hosted the Games before.

“We fought to get the SEA Games,” says the Governor. “We competed with Jakarta, West Java and Central Java. We created the Sports City in just 10 months from a swampy area comprising 320 hectares, without asking for money from the central government. We obtained funding from the private sector.

“We convinced Jakarta that we could host this international event on behalf of the Republic of Indonesia. Now the world can see that we have the spirit and powerful motivation to be number one in Indonesia.”

Alex Noerdin has been Governor of the province since 2008. “We have done a lot in just four years,” he says. “We provide free education from elementary level and we also provide free medical care. We have three priorities: education, health, and job creation for everyone. But to achieve our goals we have to make the world believe in the province of South Sumatra and to invest in productive sectors here, which will create more jobs.”

South Sumatra has a lot going for it. The province has abundant natural resources. Its agriculture-based economy has played a key role in Indonesia becoming the world’s main palm oil producer, and it is the second largest producer of raw rubber. Almost 50% of Indonesia’s coal resources are to be found there. 

“Our province is one of the richest in Indonesia, but only in terms of potential,” the Governor says. “We need investment from outside.”

He aims to attract investments in the minerals/ore processing industry, agro-businesses, biotechnology industries, and oil and gas refineries.

“Our province is one of the richest in Indonesia, but only in terms of potential. We need investment from outside.”

Alex Noerdin,
Governor of South Sumatra

“We have a lot of coal and gas. We also have oil, coal bed methane, and 28% of the world’s potential in geothermal. There is a special economic zone where we do coal gasification. We make tires in a factory and we export them to China. We are developing the downstream crude palm oil (CPO) industry. We can create jobs for our people with these industries.”

He emphasizes the province’s strategic location. “We are only 400 kilometers from Singapore, the gateway to Asia. In three or four years’ time we will create almost 300,000 jobs for our people. I am very sure that we will be leading in every sector.”

There are plans to make Tanjung Api-Api, about 80 kilometers north of Palembang, a special economic zone housing several industries and a seaport.

The Governor is particularly keen to get U.S. investors to invest in infrastructure. “I am inviting investors to come to South Sumatra to develop a double track railway and transport for coal. We have worked with American companies for years,” he says. “Now we are inviting more to come over to South Sumatra. They can also contribute in the education and health sectors.”

When Scot Marciel, the U.S. ambassador, visited South Sumatra in February he declared himself very impressed by the economic growth and investment potential in the province. The purpose of the visit was to promote cooperation and exchange initiatives in education and learn about investment opportunities for U.S. companies.

There is already significant presence by U.S. companies in South Sumatra, most notably ConocoPhillips, which operates a block of six oil fields and six natural gas fields, and Cargill, which has more than 36,000 hectares of sustainable oil palm plantation in the province.

Hosting international and national events is proving an effective way to put South Sumatra on the investment map. Investment in the province last year reached Rp11.5 trillion ($1.29 billion) from the original target of Rp9 trillion.

According to a spokesman for the South Sumatra Regional Investment Permit and Promotion Body, the target for this year is Rp13.5 trillion in investment.

Meanwhile, Governor Alex Noerdin is looking further ahead. He wants the central government to back his drive for Palembang to host the 2019 Asian Games.