KUALA LUMPUR, Malaysia Malaysian investors should consider expanding their investment portfolio in Indonesia into the manufacturing sector, as well as developing industry clusters, former Indonesian Coordinating Minister for Economic Affairs Prof Emeritus Dorodjatun Kuntjoro-Jakti said.

Malaysian investments at present are mainly in the plantation sector and expanding the portfolio would further boost bilateral economic relations between both countries, he told reporters on the sidelines of the Institute of Strategic and International Studies (ISIS) Malaysia International Affairs Forum here today.

Earlier, Dorodjatun presented a paper titled "A Conjecture on the Way Forward of Malaysia-Indonesia Economic Relations.

He also noted a lack of private sector participation between both countries.

"Malaysia should go beyond plantation... go all the way into manufacturing. But again, what can be very attractive is if we can agree to establish an industrial cluster, maybe the size (of an) economic zone in China.

"With that cluster, you will have a huge area where you can have not just Malaysia-Indonesia business-to-business efforts in building manufacturing industry for products needed by the world.

We are also living next to a huge market. India is going have the (largest) population by 2050," he added.

Meanwhile, Dorodjatun said that Malaysia would be able to escape the middle-income trap in the next five to six years with the implementation policies moving in the right direction.

"With US$8,000 per capita income, in a few years you are going to be out from the middle income trap. When you are facing difficult problem in the economy, you need a very good combination between fiscal and monetary policy. We call it wiggle room. You are very comfortable as I see it.

"You are maybe at par with South Korea (in terms) of survivability if you (were to) face events such as global financial crisis again. Hopefully not," he added.

Source: NAM News Network

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