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Things You Should Know About Foreign Investment in Indonesia

Things You Should Know About Foreign Investment in Indonesia

About foreign investment in Indonesia – The Indonesian Investment Coordinating Board is confident of achieving an investment realization target of 670 trillion rupiah in 2017 and 840 trillion rupiah in 2018. The target is set by President Joko Widodo. To that end, the Investment Coordinating Board of Indonesia will hold investment promotion in several countries. The issue about foreign investment in Indonesia is a very interesting thing to know. If your company is currently interested in investing in Indonesia, this info is definitely very useful for you.

The head of the Indonesian Investment Coordinating Board, Thomas Lembong, said he is currently studying a number of opportunities to pursue the target. A number of meetings will be held to attract foreign investment. Thomas said, in recent weeks, it has held meetings with various investors from various countries. The Indonesian Investment Coordinating Board has also utilized President Jokowi’s visit to India from 12-13 December 2016 to attract more investors.

During the visit, President Jokowi also wanted to explore further about the diversification of Indonesian exports to India also discussed efforts to increase about foreign investment in Indonesia, especially in the field of raw materials industry of drugs.

In addition, Indonesia’s Investment Coordinating Board will increase investment in a number of other potential countries, especially Singapore, Japan and South Korea, including investment opportunities for China and the United States. In addition to electricity infrastructure, the government will also offer manufacturing projects, import substitution, petrochemicals, steel, oil and gas, food beverage industry, footwear, furniture, and services sectors.

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Economist from the Institute for Development of Economic and Finance (Indef) Didik J Rachbini rate, the easiest way to attract investors is to come to the most potential investors and provide incentives. This will trigger other investors to invest in Indonesia. Finding investors to enter Indonesia is relatively easy. We just need to find the dragon’s head, in New York, London, or Tokyo. Find one or two people, and then drag the others here. Do not forget to prepare the red carpet, give legal guarantee, and tax policy. The point is to treat him like a king; the tail will follow later.

Condition of Foreign Investment in Indonesia

The Investment Coordinating Board reported the realization of investment of Domestic Investment and Foreign Investment in the first quarter of 2017 reached 165.8 trillion rupiah. That figure grew 13.2 percent compared to 146.5 trillion rupiah in the same period last year. The realization of the investment absorbs 194,000 workers.

During the first quarter of 2017, domestic investment reached 68.8 trillion rupiah, up 36.4 percent from 50.4 trillion rupiah in the first quarter of 2016. The realization about foreign investment in Indonesia reached 97 trillion rupiah, up 0.94 percent from 96.1 trillion rupiah in the first quarter of 2016.

Thomas said that the spread of investments outside Java continues to increase, reaching 75.3 trillion rupiah in the first quarter of 2017. This figure is equivalent to 45.4 percent of total investment, compared to 44.9 percent in the first quarter of 2016.

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The investment realization in Java is 90.5 trillion rupiah in the first quarter of 2017. The Investment Coordinating Board of Indonesia noted that the realization of investment based on the largest project location is in West Java (29.3 trillion rupiah or 17.7 percent), DKI Jakarta ( 24.2 trillion rupiah or 14.6 percent), East Java (12.6 trillion rupiah or 7.6 percent), Banten (12.4 trillion rupiah or 7.4 percent), and Central Java (11.9 trillion rupiah or 7.2 percent).

Realization of investment by business sector is mining (23.6 trillion rupiah or 14.2 percent), food industry (18.5 trillion rupiah or 11.1 percent), transportation, warehouse and telecommunications (18.4 trillion rupiah or 11, 1 percent), electricity, gas and water (16.7 trillion rupiah or 10.1 percent), and basic metals, metal goods, machinery and electronics industries (15.2 trillion rupiah or 9.2 percent).

The top five countries of overseas investment origin are Singapore (2.1 billion US dollars or 28.2 percent), Japan (1.4 billion US dollars or 19.2 percent), China (0.6 billion US dollars or 8, 2 percent), the United States (0.6 billion US dollars or 8.2 percent), and South Korea (0.4 billion US dollars or 5.8 percent).

Reasons Why Indonesia Needs Foreign Investment

One of the main reasons why Indonesia needs foreign investors is the people’s consumption power and the low export trend. The infrastructure of industrial zones and economic sectors of the economy can certainly cost a lot of money.

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Meanwhile, Indonesia does not have enough savings to fund the development from its own pocket. That way, development cannot only rely on domestic investment.

Foreign investors who invest by building companies or factories in Indonesia are expected to absorb the local workforce with the maximum. By employing local human resources, foreign companies operating in Indonesia can educate workers about the quality of products, production technology, and a good work ethic. So, investment is not only done for economic purposes, but also builds intellectual investment for the workforce.

Foreign investment will automatically increase the number of exports, especially in the product sector. In the tourism sector, the rapid development of tourist destinations will attract foreign tourists to come so that will increase foreign exchange earnings of the country.

In this era of globalization, foreign investment no longer needs to be seen as a threat. In contrast, foreign investment is now increasingly seen as the driving force for national development. With the support and positive involvement of the government, society, and domestic industry players, foreign investment can be managed to be something that is beneficial to the state.

So, if you are interested about foreign investment in Indonesia you should learn about the culture and needs that exist. Do not forget to touch the feeling side of the community so it will be easy to accept.

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