General Electric Co, the largest US conglomerate, sees revenues from Southeast Asia rising as much as 30 percent this year and expects investment in the region of at least $1 billion in the next three years.
GE, the world's largest maker of jet engines and electric turbines, expects revenues in the region of between $3 to $3.5 billion this year, up from $2.7 billion last year, said Stuart L. Dean, GE's chief executive officer for ASEAN.
Dean told Reuters the company was very confident that the economies of Southeast Asia combined would grow by at least 5 percent a year, and it was eyeing investment projects in Indonesia and Vietnam.
"I would say investment would be at least one billion dollars over the next three years and hopefully a lot more," Dean said in an interview on the sidelines for a business environment conference in Jakarta.
GE, whose main businesses in Southeast Asia are aviation systems, power generation engineering, health care and oil and gas technology, also invested $1 billion in the region in the last three years. Globally GE now sees its best earnings growth prospects in a decade as the world's economic recovery drives demand for the heavy energy and aviation equipment it makes, top executives said at its shareholders meeting this week.
Free trade agreements between members of the Association of Southeast Asian Nations (ASEAN), which also include Malaysia and Thailand, have benefited GE in doing business in the region, Dean said.
ASEAN is aiming to build an economic community by 2015 that would encompass around 500 million people and have free flow of capital between its more developed members. Its $1.8 trillion economy is larger than India's. "You don't want to do an investment just to serve one country. There is too much volatility within individual markets. But, if we look at ASEAN as a region, with the free trade area, at least products flow pretty freely," Dean said.
Indonesia, Southeast Asia's largest economy, has lagged its peers in attracting foreign direct investment from Western firms because of concerns over corruption, red tape and poor infrastructure, though Dean said bureaucracy had improved.
However, he said Indonesia needed to get away from its addiction to fossil fuel subsidises and to develop renewable energy through incentives, such as higher tariffs for power generated from geothermal sources versus coal. Indonesia, the largest thermal coal exporter and the third largest liquified natural gas exporter, is boosting power generation from coal as well as geothermal.
"Indonesia has the right direction on geothermal, that's great. There is also power generation from coal bed methane. There need to be some early incentives to get some of these projects off the ground so investors have confidence," he said. GE's energy unit accounted for a quarter of its $150 billion in revenue last year and was its most profitable division.
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