Indonesia Aims to Quadruple Foreign Investment by 2025

Indonesia’s economy remains impacted by global dynamics, including the U.S. election results, the slowing of China’s economy, and geopolitical conflicts in certain countries and regions.

David Sumual, Chief Economist at PT Bank Central Asia, stated that Indonesia cannot rely solely on domestic savings to achieve economic growth rates above 5%.

“For Indonesia’s economy to grow at 6% to 7%, it needs to attract three to four times more foreign investment than it does currently,” David said at the Denpasar 12 Discussion Forum on November 6, 2024, as reported by asatunews.co.id.

At the same forum, CNBC Indonesia’s Deputy Editor in Chief, Muchamad Ghufron, highlighted Indonesia’s struggles to attract foreign investors, especially in technology sectors.

He mentioned that many potential investors face challenges with regulatory ease and land acquisition, leading them to prefer locations like Johor, Malaysia, for their factory establishments.

Ghufron urged the government to revise regulations that hinder investment and to adopt import policies that support local products.

Sonny Y Soeharso, Deputy Secretary of the Expert Council of the NasDem Party, emphasized the importance of aligning key government programs with available budgets.

“Program priorities and budget structures must be aligned, necessitating prudent budgetary politics,” he said, adding that without significant economic strategies, growth would likely hover around 5%.

To achieve a growth rate of 7%-8%, he suggested targeted policies, strategies, and workforce skill improvements to meet global market needs.

Indonesian Vice Chair of People’s Consultative Assembly, Lestari Moerdijat, known as Rerie, in her opening remarks, stressed the role of optimism in achieving Indonesia’s growth targets.

“Optimism is crucial for driving economic growth, yet we must also prepare for challenges and continue seeking solutions,” Rerie stated.

In September, Bank Indonesia predicted an economic growth rate of 4.8% to 5.6% by 2025. She expressed hope that economic challenges would not hinder Indonesia’s aspirations for a prosperous society.

Top Foreign Investors in Indonesia

According to Investment Minister Rosan Perkasa Roeslani, Singapore has consistently been Indonesia’s top foreign investor over the past decade.

Foreign investment from Singapore reached $9.39 billion in 2021, increased to $13.28 billion in 2022, and surged to $15.36 billion in 2023. As of September 2024, Singapore’s investment in Indonesia reached $14.35 billion.

Under Law No. 25 of 2007, foreign investment in Indonesia involves overseas capital injection for establishing businesses within the country, either fully foreign-owned or in joint ventures with local investors. This capital inflow boosts job opportunities, enhances local workforce skills, and fosters economic growth.

According to the Central Statistics Agency, FDI in Indonesia has shown consistent growth, from $31.09 billion in 2021 to $45.6 billion in 2022, reaching $50.26 billion in 2023, quoting form goodstats.id.

Apart from Singapore, other key investors in Indonesia are Hong Kong and China. In 2022, Hong Kong’s FDI reached $5.51 billion, rising to $6.06 billion in 2023. By September 2024, Hong Kong’s investment totaled $6 billion.

“Hong Kong consistency in investing in Indonesia with interests in sectors like solar energy and services such as law firm and accounting.” Said Kevin Chiu, Director for Indonesia at the Hong Kong Trade Development Council as reported by jakartaglobe.id.

Meanwhile, China, another major investor, contributed $8.23 billion in 2022 and $7.44 billion in 2023, with $5.78 billion in investments by September 2024. China’s investments span across construction, maritime, and infrastructure projects. A total of 464 construction projects in Indonesia funded by Chinese capital.

These foreign investments play a critical role in enhancing Indonesia’s economic landscape, supporting infrastructure development, creating jobs, and contributing to overall economic stability.

The Indonesian government is expected to continue adjusting its policies to make the nation an even more attractive destination for foreign investors.

 

Sources: asatunews.co.id, goodstats.id, jakartaglobe.id

Image source: pexels.com

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