But cooperation between the two countries is being hampered by Indonesia's lack of transparency as well as red tape and unclear rules, Locke said Wednesday in an address to the American Chamber of Commerce in Indonesia. The speech was part of Locke's 2-day visit to Jakarta.
"As I talk to American business leaders, the overriding concern that I hear is that there is often not enough government transparency," Locke said. "Businesses frequently don't know what the rules are, how they will be enforced or how decisions are made. This is particularly true at the local level."
These constraints have the potential to inhibit foreign corporate investment in Indonesia, particularly in the energy sector in which upfront capital investments typically can be hundreds of millions of dollars, he said.
"Ultimately, all the United States seeks is a level playing field for its companies, where the cost and quality of their products determines whether or not they win business," he said.
And Indonesia's policies, favoring fossil fuels, make operating difficult for clean energy companies, Locke told the chamber.
Locke's Jakarta visit was part of a clean energy business development trade mission that began May 16 in Hong Kong with stops in Shanghai and Beijing. Accompanying Locke were executives from 10 U.S. companies, including General Electric, Lockheed Martin, Peabody Energy and Pratt & Whitney Power Systems.
The mission comes ahead of U.S. President Barack Obama's visit to Indonesia in June, in which he is expected to sign a comprehensive partnership with President Susilo Bambang Yudhoyono covering trade, investment and the environment.
In his speech, Locke noted Jakarta's commitment to clean energy goals. The Indonesian government aims to increase renewable energy production from 7 percent of generating capacity to 15 percent by 2025. It has pledged to cut greenhouse gas emissions by 26 percent by 2020 and 41 percent with foreign assistance.
Indonesia is the world's third biggest emitter of greenhouse gas. WWF says deforestation and forest degradation account for more than 83 percent of Indonesia's carbon emissions.
The archipelago nation, Southeast Asia's largest economy, could become a leading renewable energy market. It has more than 40 percent of the world's known geothermal resources and is also rich in solar and wind power potential.
Pointing to Indonesia's initiative to provide electricity to another third of its population by 2020 as an example, Locke said that global energy use is likely to double by the middle of the century.
"Worldwide, energy is a $6 trillion market. And the fastest-growing sector is of the cleaner, greener kind," he said.