Indonesia’s Investment Competitiveness Rivals Vietnam

Flags of ASEAN member countries representing regional cooperation and Indonesia's investment competitiveness in Southeast Asia.

Indonesia is increasingly capturing global attention as a prime investment destination in Southeast Asia. With its economic growth and abundant resources, the country stands out among regional competitors.

Notably, Indonesia is challenging Vietnam, a key player in the investment landscape. This article explores the key factors driving Indonesia’s appeal, its competitive sectors, and how it stacks up against its neighbours. By understanding these dynamics, investors can better appreciate Indonesia’s growing influence in the region.

 

Indonesia’s Investment Competitiveness: Key Drivers

Indonesia’s ability to attract foreign investors stems from several key factors. One major advantage is its large domestic market, which accounts for 40 percent of ASEAN’s population and contributes 36 percent of the region’s economic output.

This market provides unparalleled opportunities for businesses to thrive. Additionally, streamlined regulations have enhanced the ease of doing business, demonstrating Indonesia’s commitment to reducing bureaucratic barriers.

These reforms, as Sri Endang Novitasari, Director of Promotion for the Americas and Europe at the Ministry of Investment and Downstreaming, noted, have significantly improved Indonesia’s global investment appeal.

  

How Indonesia and Vietnam Compete for Investments

Indonesia and Vietnam both serve as attractive investment destinations in Southeast Asia, but they have distinct strengths. Vietnam excels in electronics and technology manufacturing, leveraging its well-developed infrastructure and export-oriented policies.

In contrast, Indonesia offers a broader domestic market and abundant natural resources, which give it a competitive edge in various industries. Recent regulatory reforms and infrastructure improvements further strengthen Indonesia’s position, enabling it to compete effectively with Vietnam’s manufacturing prowess.

 

Key Sectors Fuelling Indonesia’s Economic Growth

Several sectors are driving Indonesia’s economic growth and positioning it as a key player in Southeast Asia. Renewable energy is one of the most promising areas, given the country’s abundant natural resources.

Indonesia has significant potential to develop wind, wave, and geothermal energy. With the global focus on combating climate change, these sectors present lucrative opportunities for investors seeking sustainable ventures.

Another critical area is Indonesia’s rapidly growing digital economy. As digitalization accelerates and technology penetration increases, this sector has become a cornerstone of economic growth.

The digital economy not only supports job creation but also drives innovation and economic diversification. As Dwi Raihan, a researcher at Next Policy, stated, as reported by investor.id, “The rapid digitalization coupled with technology penetration allows Indonesia to develop a digital economy that creates numerous jobs.”

Tourism and creative industries are also vital contributors to Indonesia’s growth. The nation’s rich cultural heritage, diverse culinary offerings, and breathtaking destinations provide a strong foundation for these industries.

 

Indonesia’s Policies Boosting Foreign Investment

Regulatory reforms have played a pivotal role in enhancing Indonesia’s investment climate. The introduction of the Online Single Submission (OSS) system, which integrates 18 ministries and agencies, has significantly simplified the licensing process.

This innovation minimizes face-to-face interactions and reduces inefficiencies in the approval process. Synchronizing central and regional regulations has further streamlined operations, addressing longstanding issues of overlapping rules.

Sri Endang Novitasari highlighted that these efforts have made Indonesia increasingly attractive to global investors. In addition to simplifying regulations, Indonesia’s government continues to capitalize on its strong domestic market. According to Sri, leveraging this economic strength while improving ease of doing business will ensure sustained growth and competitiveness.

 

Indonesia’s Regional Role in Investments

Indonesia is cementing its role as a leader in regional investments, attracting attention from global powers. The country’s large domestic market, abundant resources, and strategic location make it an ideal gateway to Southeast Asia.

Recent international engagements underscore Indonesia’s growing prominence. For example, during a working visit to the United Kingdom, Indonesia secured $8.1 billion in investment commitments, reflecting heightened international trust.

Moreover, Indonesia’s commitment to sustainable development, especially in renewable energy and digital innovation, aligns with global investment trends. These efforts not only boost Indonesia’s economic potential but also highlight Indonesia’s investment competitiveness, positioning the nation as a reliable partner for foreign investors seeking opportunities in Southeast Asia.

 

 

Source: investor.id, rm.id

Image: NuwaPhotos/Canva

Latest Article
Budget Efficiency Impact on Tourism: A Double-Edged Sword?
The Budget Efficiency Impact on Tourism has become a pressing concern as the Indonesian government implements...
Ministry Promotes Marine Biopharmaceuticals
According to Antara News, Indonesia’s Ministry of Marine Affairs and Fisheries is actively promoting...
Prabowo Outlines Fiscal Strategy for 2025
Speaking at the 17th anniversary celebration of the Gerindra Party at Sentul International Convention...
Downstreaming Projects Prepared for Investors
According to Yuliot Tanjung, Deputy Minister of Energy and Mineral Resources (ESDM), the Indonesian government...
Risks of Indonesia's Energy Transition Commitment Decline
Indonesia’s commitment to energy transition is under scrutiny as recent policy developments raise...

Andrzej Barski

Director of Seven Stones Indonesia

Andrzej is Co-owner/ Founder and Director of Seven Stones Indonesia. He was born in the UK to Polish parents and has been living in Indonesia for more than 33-years. He is a skilled writer, trainer and marketer with a deep understanding of Indonesia and its many cultures after spending many years travelling across the archipelago from North Sumatra to Irian Jaya.

His experience covers Marketing, Branding, Advertising, Publishing, Real Estate and Training for 5-Star Hotels and Resorts in Bali and Jakarta, which has given him a passion for the customer experience. He’s a published author and a regular contributor to local and regional publications. His interests include conservation, eco-conscious initiatives, spirituality and motorcycles. Andrzej speaks English and Indonesian.

Terje H. Nilsen

Director of Seven Stones Indonesia

Terje is from Norway and has been living in Indonesia for over 20-years. He first came to Indonesia as a child and after earning his degree in Business Administration from the University of Agder in Norway, he moved to Indonesia in 1993, where he has worked in leading positions in education and the fitness/ wellness industries all over Indonesia including Jakarta, Banjarmasin, Medan and Bali.

He was Co-owner and CEO of the Paradise Property Group for 10-years and led the company to great success. He is now Co-owner/ Founder and Director of Seven Stones Indonesia offering market entry services for foreign investors, legal advice, sourcing of investments and in particular real estate investments. He has a soft spot for eco-friendly and socially sustainable projects and investments, while his personal business strengths are in property law, tourism trends, macroeconomics, Indonesian government and regulations. His personal interests are in sport, adventure, history and spiritual experiences.

Terje’s leadership, drive and knowledge are recognised across many industries and his unrivalled network of high level contacts in government and business spans the globe. He believes you do good and do well but always in that order. Terje speaks English, Indonesian and Norwegian.

Per Fredrik Ecker

Managing Director of Seven Stones Indonesia, Jakarta

Per is the Managing Director of the Seven Stones Indonesia (SSI) Jakarta office and has more than 25-years’ experience in Indonesia, China, and Western Europe. He previously worked in senior management positions with Q-Free ASA, Siemens AG, and other companies in the telecom sector. Over the last six years, he has been the Chairman of the Indonesia-Norway Business Council (INBC) and recently become elected to be on the board of EuroCham Indonesia.

His most recent experience is within Intelligent Transport Solutions (ITS), Telecom, and other sectors within the Indonesian market. He is today through his position in SSI and by representing Norway Connect, promoting Nordic and European companies that would like to explore business opportunities in the Indonesian market. He’s also playing an active role to help create the Nordic House concept in Jakarta that will provide an excellent platform for Nordic companies entering Indonesia, where they’ll find a community that can offer support with trusted information and affordable services to enter this market.

Contact Our Consultants

Ridwan Jasin Zachrie

CFO of Seven Stones Indonesia, Jakarta

Ridwan is one of Indonesia’s top executives with a long and illustrious career in the financial world. He holds several professional certifications including being a Certified Business Valuer (CBV) issued by the Australian Academy of Finance and Management; Broker-Dealer Representative (WPPE); and The Directorship Certification for Directors and Commissioners, issued by the Indonesian Institute of Commissioners and Directors.

His experience includes being the Managing Director at one of the top investment banking groups in the region, the Recapital Group, the CFO at State-owned enterprises in fishery industry and the CEO at Tanri Abeng & Son Holding. He’s also been an Independent Commissioner in several Financial Service companies and on the Audit and Risk Committee at Bank BTPN Tbk, Berau Coal Energy Tbk, Aetra Air Jakarta as well as working for Citibank, Bank Mandiri and HSBC. His last position was as CFO at PT Citra Putra Mandiri – OSO Group.

Ridwan has won a number of prestigious awards including the Best CFO Awards 2019 (Institute of Certified Management Accountant Australia-Indonesia); Asia Pacific Young Business Leader awarded by Asia 21 Network New York USA (Tokyo 2008); UK Alumni Business Awards 2008 awarded by the British Council; and The Most Inspiring Human Resources Practitioners’ version of Human Capital Magazine 2010.

He’s a member of the Board of Trustees of the Alumni Association of the Faculty of Law, Trisakti University, Co-Founder of the Paramadina Public Policy Institute and actively writes books, publications and articles in the mass media. He co-authored “Korupsi Mengorupsi Indonesia” in 2009, which helps those with an interest in understanding governance in Indonesia and the critical issue of corruption. Ridwan speaks Indonesian and English.