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Indonesian Foreign Investment Policies and Projects

Source: CAEXPO Wechat    Time:2019-06-05 19:38:28

Quotable Quotes|CAEXPO Seminar on Investment Promotion (Indonesia)2019

By Deputy Chairman of the Indonesian Investment Coordinating Board Ikmal Lukman

 

WHY INDONESIA

 

Indonesia has the largest economy in ASEAN which GDP reach more than US$ 1 trillion. Indonesia’s economy has been growing stable at the rate of around five per cent. 260 million population, with the consuming class twice than the population of Australia, make Indonesia as the potential market and 44% of the population is young and productive. Indonesia also is a global leader in social media with the world’s third largest market for Facebook and the most active city for twitter in the world. 

 

As a result of Indonesia’s continues reform on the investment climate, many institutions, such as the World Bank and International Rating Agencies, have recognized Indonesia as a stable, safe, and reformist country that is more than ready to welcome investors. Indonesia also gains investment grade from all reputable international rating agencies, including S&P, Moody’s, and Fitch Rating.

 

 

 

CHINA’S INVESTMENT IN AND COOPERATION WITH INDONESIA

 

Indonesia and China have a very close relationship. In the last 5 years from 2014 to first Semester 2019, China’s investment in Indonesia was accounted for 10.9 billion USD or equal to 7 per cent of the total FDI received by Indonesia in the same period.Investment from China in Indonesia has grown rapidly and keep strengthening its presence.In Q1 2019, China become the Largest Investors. China’s investment in Indonesia in the last five years was dominated by secondary sectors which were accounted for 57 per cent of China’s total FDI in Indonesia during the period.Metal, machinery, and electronic industry received the largest investment from China. More than 4 billion USD (equal to 44% of China’s total FDI to Indonesia) was injected into this industry. Followed by electricity, gas, and water supply; and transport, warehouses, telecommunication. 

 

In terms of location, 42 per cent of China’s investment in Indonesia was realized in Java Island; about 41 per cent was realized in Sulawesi Island, and 17 per cent was in other Islands.

 

INVESTMENT OPPORTUNITIES

 

In the spirit of increasing the collaboration between Indonesia and China through the development of the BRI, Indonesia has prepared 4 regions that are open for landmark projects: North Sumatera for Western Indonesia economic and business hub for ASEAN; North Kalimantan for energy and mineral hub; North Sulawesi for the pacific-rim economic hub;AndBali for high-tech and creative economy hub.Those four areas offer 28 landmark projects with total investment 91 billion US dollars from infrastructure, such as port and airport, to industry and Tech Park, as well as many other investment opportunities.

 

 

Tourism is the new rising star in Indonesia’s economy. Last year, its contribution to our GDP was 13 per cent. This number is expected to rise to 15 per cent in 2019 as we target 265 million domestic visits and 20 million foreign visitors next year. In 2016, for the very first time, China overtook Singapore as Indonesia’s largest tourist source with 1.43 million trips to Indonesia, up 25 per cent year-on-year.In addition, Indonesia is also developing new tourism destinations called the “10 New Bali” which will be the future centre of Indonesia’s tourism industry.  

 

Investment opportunities are also offered by agriculture and food industry. Indonesia is the largest market in the region, accounted for 40 per cent of ASEAN total population. It is also the world’s fifth largest source of agriculture product, offering abundant agricultural resources to be processed. 

 

Indonesia is also open for investment in many other sectors, especially those who:Bring new and environmental-friendly technology;Give value added to our resources;Recruit as much local labour as possible; and do technology transfer.

 

We provide the direct construction facility or KLIK in 48 selected industrial estates. Investors are now able to directly build their factory, in parallel with building construction and other licenses, including environmental permit.

 

BREAKTHROUGH ON INVESTMENT CLIMATE

 

Indonesia’s Government is carrying its reform strategy steadily and inclusively. 

 

In the investment sector, the Government of Indonesia is committed to making starting a business in Indonesia hassle-free by standardizing, integrating, and coordinating the investment licensing processes and regulations. 

 

We have omitted, combine, simplify, and delegate redundant regulations and permits in 17 sectors including industry, tourism, as well as food and beverages.

 

Since 2009, Indonesia has also reformed investment incentive policies. Regulations on Tax Allowance, Tax Holiday, and Import Duty Exemption are now more investors friendly.

 

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