Speaking on the sidelines of a Dubai Chambers forum in Jakarta on Monday (6/5/24,) Pradana Indraputra, a special advisor at the Investment Ministry, Middle Eastern investors, called for the United Arab Emirates (UAE) to “open the doors” for Middle Eastern investors, as investment coming from the region is still comparably low when compared to FDI from East Asia, according to reporting from Jakarta Globe.
Government data shows Middle Eastern countries failed to crack the top 30 sources of Indonesia’s foreign direct investment (FDI) in the first quarter of 2024. East Asian economies such as China and Japan are in the top five, with Chinese investors investing around USD 1.9 billion in that period.
Meanwhile, FDI coming from Japan hit USD 976.5 million. Neighboring country and fellow ASEAN member Singapore became Indonesia’s largest investor, totaling around USD 4.2 billion. For comparison, the UAE invested USD 4.1 million in Indonesia throughout Q1-2024, while FDI from Saudi Arabia totaled only USD 600,000.
“The FDI that Indonesia secured from the Middle East is still far behind what we got from East Asian countries … and even our close neighbors Malaysia and Singapore. Even though we are aware of the incredible financial capacity that the UAE and the Middle East hold, their direct investments to Indonesia are not as strong,” Pradana told the press on Monday, adding that “We are hoping that the UAE can become a pioneer to usher in investments from the Middle East.”
When asked what made Middle Eastern investors shy away from Indonesia, Pradana said that they prefer investing in brownfield projects. In other words, they are more inclined to acquire existing companies rather than create something from nothing, reports Jakarta Globe.
“Each country has its own preferences when it comes to investing abroad. Middle Eastern investors typically favor brownfield investment. They don’t want to start from scratch, so they prefer acquisitions or entering the financial markets. We are trying to nudge them into tapping into greenfield projects,” Pradana said while saying Indonesia would give interested investors tax holidays and tax allowance.
According to Jakarta Globe, Indonesia is currently banking on its comprehensive economic partnership agreement (CEPA) with the UAE to boost bilateral investment figures. The Dubai Chambers today has brought a number of companies for some business talks in Jakarta, such as food and beverage firms Tamreem Dates Company and Le Chocolat, to name a few. Mining giant Emirates Global Aluminum (EGA) was also present, according to the billboards shown at the event.
“[We are interested] in agriculture, construction, and automotive sectors, among others. We notice increased interest in the technology sector,” said Mohammad Lootah, the president and chief executive officer of Dubai Chambers.
He added that Emirati businesses were eyeing Indonesia as the country that largely powers ASEAN’s economy.
Source: Jakarta Globe
Stock photo by Timo Volz on Pexels
