On 9 March 2021, the Minister for Trade and Industry Chan Chun Sing and Indonesia’s Minister for Foreign Affairs Retno Marsudi (“Ministers”) jointly announced the entry into force of the Singapore-Indonesia Bilateral Investment Treaty (“BIT”) at a virtual meeting.
The BIT was signed in 2018 by the Ministers and witnessed by Singapore Prime Minister Lee Hsien Loong and Indonesian President Joko Widodo. The BIT introduces new norms from the previous Singapore-Indonesia Bilateral Investment Treaty that expired on 20 June 2016.
It aims to promote stronger economic ties and cooperation between Singapore and Indonesia. The BIT establishes rules on the treatment of investors and investments from both countries, providing additional protection on investments.
Effect of BIT
The press release issued by Singapore’s Ministry of Trade and Industry (“MTI”) notes that the entry into force of the BIT is an important milestone in the countries’ longstanding economic relationship. The BIT will offer greater protection for Singapore investors venturing into the Indonesian market and vice versa, safeguarding investments and boosting investors’ confidence.
Despite the Covid-19 pandemic, Singapore continued to be Indonesia’s top source of foreign direct investments in 2020, with investments totalling US$9.8 billion, an increase from previous years. Minister Chan noted that there has been a continuous flow of investments into Kendal Industrial Park in Central Java, a special economic zone, and in Nongsa Digital Park, which has served as a “digital bridge” for tech companies in both Singapore and Indonesia.
Similarly, Indonesia remained one of Singapore’s top ten trading partners in 2020, with bilateral trade reaching S$48.8 billion. The BIT is expected to further boost Indonesia’s attractiveness to Singapore companies. The Ministers believe that the BIT could increase bilateral investment by 18-22% over the next five years.
The following materials are available on the MTI website:
- Press release
- Speech by Minister Chan Chun Sing for the Virtual Exchange of the Instruments of Ratification and Entry into Force of the Singapore-Indonesia Bilateral Investment Treaty