Indonesian government optimistic about investment growth in 2019-2024 period

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One of Jokowi’s priority programmes during his second term as president is to drive foreign investment and in turn, generate more employment opportunities for Indonesians.

In a bid to achieve the target, the government is providing incentives and taking steps to remove regulations in the investment process for both foreign and domestic markets.

The five major foreign investors are Singapore, with investments worth US$3.4 billion; Japan (US$2.4 billion); China (US$2.3 billion); Hong Kong (US$1.3 billion); and Malaysia (US$1 billion).

 

Jokowi outlined his priority programs also encompassing infrastructure development at an event called “Indonesian Vision” held at the Sentul International Convention Center, Bogor, West Java, on July 14, 2019, following his victory in the 2019 presidential elections.

 

Read more on Jokowi’s vision for 2019

Over the past week, in a bid to pursue the investment target, the president had held meetings with potential investors, including the Abu Dhabi Crown Prince, Sheikh Mohamed Bin Zayed Al Nahyan, who had echoed his country’s commitment to boosting investment in Indonesia.

During a visit to Indonesia on July 24, 2019, three investment pacts worth $9 billion were inked in the presence of the Crown Prince and the Indonesian president at the Bogor Presidential Palace.

On the subsequent day, Jokowi held discussions, prioritizing efforts to intensify investment in Indonesia, with leaders from the Hyundai Motor Group.

“We spoke about the investment plan from Hyundai Motors in Indonesia,” Industry Minister Airlangga Hartarto remarked after accompanying President Jokowi to welcome Hyundai Motors delegates at the State Palace in Jakarta.

Hyundai Motors plans to produce vehicles in Indonesia and has outlined an export target of 40 percent abroad and in the domestic market. Discussion on the investment value is yet underway.

Furthermore, Jokowi had received Softbank CEO Masayoshi and Grab CEO Anthony Tan at the Merdeka Palace in Jakarta on July 29.

Following the meeting with Jokowi, Masayoshi remarked that Softbank will once again invest US$2 billion in Indonesia. The bank had earlier invested US$2 billion in Indonesia. The investment will be carried out through Grab and another company supplying environment-friendly electric cars.

The government has set a target of investment, or Gross Fixed Capital Formation (PMTB), to grow by 6.88 to 8.11 percent during the 2020-2024 period.

indonesian government

In a bid to achieve the target, the government has provided incentives in the form of deregulation of investment procedures for foreign and domestic private investment, Minister of National Development Planning/Head of the National Development Planning Agency (Bappenas) Bambang Brodjonegoro stated during the Indonesia Infrastructure Investment Forum (IIIF) 2019 held in London on July 2.

The government has synchronized regulation on licensing and made all-out efforts to increase its Easy-of-Doing Business (EoDB) ranking, from 73 in 2019 to 40 in 2024.

The government, including state firms, has also stepped up investment, especially for infrastructure development. The shares in infrastructure development reached 50 percent of the gross domestic product (GDP), while capital expenditure is expected to reach 2.3-2.8 percent in 2024.

Indonesia will require US$429.7 billion of investment in infrastructure, or 6.1 percent of its GDP, during the 2020-2024 period, a 20 percent rise as compared to US$359.2 billion of investment in the sector during the 2015-2019 term.

Of the total investment, the government and state-run firms will contribute 11.6-13.8 percent and 7.6-7.9 percent respectively, while the remaining will be sourced from public and private investment.

indonesian government
indonesian government national strategic projects

“The government has encouraged the role of the private sector in infrastructure development under the Public Private Partnership (PPP) scheme and Non-Government Budget Investment Financing (PINA),” he remarked.

The government will also need to explore the financial market, especially the non-banking sector; increase access to financial services or financial inclusion; and optimize funding alternative.

Moreover, to promote investment opportunities existing in Indonesia, the second Indonesia Investment Day (IID) was organized in Singapore on July 27, in which the attendees comprised some 500 Singapore businessmen.

Featuring Vice Foreign Minister A.M. Fachir as the key speaker, the gathering included a comprehensive panel discussion and a parallel session offering investment project packages in the industry 4.0, tourism (10 New Bali), and infrastructure, including housing, toll roads, water management, and a mass rapid transit system.

The number of investment projects and packages offered during the IID totaled 45, with a potential value of over US$3 billion.

Singapore has been the largest investor in Indonesia over the past five years, with its investment in Indonesia valued at US$43.2 billion during the period between 2013 and 2018.

The National Investment Coordinating Board (BKPM) has set the target of realized investment at Rp792.3 trillion for 2019.

The BKPM announced on July 30 that the realization of investment in the first semester of 2019 had reached Rp395.6 trillion, constituting 49.9 percent of the target.

The investment comprised domestic investment worth Rp182.8 trillion, and foreign investment valued at Rp212.8 trillion. The investment created a total of 490,715 jobs.

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Indonesia’s national projects | Invest Islands

The top five sectors where one could see investments are transportation, warehousing, and telecommunication; electricity, gas, and water; construction; food industry; and housing, industrial zone as well as office space.

The five major foreign investors are Singapore, with investments worth US$3.4 billion; Japan (US$2.4 billion); China (US$2.3 billion); Hong Kong (US$1.3 billion); and Malaysia (US$1 billion).

BKPM Chief Thomas Lembong expressed optimism that the investment trend had improved following Indonesia’s smooth and peaceful elections in April this year.

Indonesia’s improved rating given by several rating institutions has contributed to the hike in investment realization, he pointed out.

Furthermore, reconciliation among rival politicians during the post-election period has also been viewed as a supporting factor in the recovery of the investment trend in this country, he remarked.

“Indeed, challenges and threats exist, such as the trade war and a global economic slowdown. However, in Indonesia, especially, I am optimistic that the current trend is positive, and the future prospect is also very positive,” he affirmed.

indonesian government

Meanwhile, to help achieve the target, the National Industry and Economic Committee (KEIN) has recommended the government to prioritize the development of four sectors that can become leading contributors to boost the investment climate within the next five years.

KEIN Deputy Chairman Arif Budimanta has noted that agriculture, maritime, tourism, and creative economy were the four sectors.

Budimanta explained that the development of investment in the four sectors will offer added value to the country’s natural resources and create job opportunities.

 

 


Article source: https://en.antaranews.com/news/130254/government-remains-upbeat-about-investment-growth-in-2019-2024-period

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