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April 9, 2008

Hong Kong firms mull relocating to Indonesia

A number of Hong Kong companies, most of which engage in the energy, infrastructure and manufacturing sectors, are looking into the possibility of relocating their plants to Indonesia due to China’s declining competitive edge, an executive was quoted as telling Antara news agency.

"Today we are going to visit Surabaya to look at possible locations for the plants," said Alim Markus, chairman of the Indonesia-China Business Council, after meeting Indonesian Vice President Jusuf Kalla in Jakarta Tuesday.

He was accompanying a number of Chinese businessmen, who, he said, considered Indonesia a very potential market, he said.

According to Wing Kee Chan , chairman of the Hong Kong Chamber of Commerce and Industry, the Hong Kong companies considered relocating their plants to Indonesia after the Chinese government enacted labour regulations, and raised wages, which are higher than those in Indonesia. Besides, transportation costs have gone up for Hong Kong firms as the business hub has moved into China’s mainland. The companies also see Indonesia, with a population of around 230 million, as a lucrative market.

China is the fifth biggest market for Indonesian exports and the third biggest supplier of goods to Indonesia. Both Indonesia and China have committed themselves to increasing their two-way trade to $30 billion in 2010 from $20 billion in 2008.

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