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East Asian Investors Interested in Investment in Indonesia

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There is no doubt that Indonesia has succeeded in becoming a country of interest to foreign investors, this is of course good news because the growth in investment is a sign that the economy in Indonesia is developing.

The interest of foreign investors to invest in Indonesia is not a figment. Nurul Ichwan as Deputy of Investment Planning at the Ministry of Investment / BKPM said that the existence of an extraordinary market was the main reason for large investors from East Asia, such as Japan, South Korea and Taiwan.

Nurul said that the domestic market is the main thing so that investors can survive in the early years. Due to Indonesia’s extraordinary domestic market, investors are interested in investing in Indonesia, regardless of the type of investment. One of them is in the tourism sector.

Data from the 2022 statista shows that International Tourist Arrivals in Indonesia or the arrival of foreign visitors to Indonesia in 2020 fell compared to 2019. In 2020, foreign tourists were recorded at only 4.05 million people compared to the previous year which was recorded at 16.11 million.

Meanwhile, if you look at Domestics Trips in Indonesia or domestic tourists, although it has also decreased, it is not as bad as foreign tourists.

In 2019, domestic tourists were recorded at 722.1 million people and decreased to 518.5 million people in 2020.

This data, of course, has become a strength for Indonesia in attracting investors to invest in Indonesia, especially in the tourism sector. Because according to him, investors will not care whether it is foreign or local tourists as long as their tourist attractions are full of tourists.

Previously, APBN observer Awalil Rizky said the country’s need for foreign investment was not just the value of the investment invested. But the need for technology transfer from foreign companies operating in Indonesia.

The presence of investment from other countries will also make it easier for Indonesia to enter the international trade ecosystem. Not only that, it also opens up opportunities for these Indonesian-made products to be sold to the global market with an open market.

Apart from the tourism sector, investment also comes from the automotive sector, where the Indonesian automotive industry will receive refreshments from several manufacturers from Japan, South Korea and China to invest.

The Ministry of Industry (Kemenperin) said that currently there are 21 assembling industries for four-wheeled vehicles or more, with a total investment of Rp 139.36 trillion.

The investment came from Japan amounting to Rp 116.1 trillion (83.31 percent). South Korea amounted to Rp 10.54 trillion (7.56 percent) and China amounted to Rp 11.3 trillion (8.11 percent).

The rest is investment obtained from the European Union and domestically, amounting to Rp 1.42 trillion (1.02 percent).

The Minister of Investment of the Republic of Indonesia Bahlil Lahadalia ensured that investment in electric cars in Indonesia does not only come from South Korea, but there are 7 other countries that have expressed interest in investing in electric vehicles in Indonesia.

Through cooperation with many countries, Balil said he is optimistic that in the future Indonesia will become the center of the world’s car battery producers. With almost 26% of nickel raw materials controlled by Indonesia, Bahlil imagines that Indonesia should become a big country for the production of this electric car.

Moreover, many CEOs of transportation equipment companies consider that the investment climate in Indonesia is very conducive.

Meanwhile, for the new groundbreaking battery cell facility, it is planned to have a production capacity of 10 Giga Watt Hour (GwH), which will later supply electric vehicles produced by Hyundai. The total investment in the integrated electric vehicle battery project is USD 9.8 billion.

The Indonesian government will build the production of this electric car from upstream to downstream. After building a car factory and producing its electric battery, the government has also encouraged the construction of ketot precursors and smelters for downstream nickel products which are abundant in Indonesia.

In addition, the first investment commitment was successfully brought in from Mitsubishi Motor Company (MMC) amounting to Rp 10 trillion which will be realized in 2022 to 2025.

In his official statement, Mitsubishi is committed to continuing to make Indonesia a production base for hybrid cars and increasing export markets, including expanding new export markets, from 30 to 39 countries, until 2024.

This shows that the Indonesian government has succeeded in convincing the automotive industry giants to invest in Indonesia. 

Not only that, the company Chery International is also ready to disburse funds of Rp. 14 trillion in Indonesia. The funds will be used to build a production and manufacturing plant with a production capacity of up to 200,000 cars per year.

This shows that countries in East Asia have a high interest in investing in Indonesia, this achievement of course cannot be separated from the regulations prepared to attract investors.

By: Aulia Hawa )** The author is a contributor to the Nusantara Reading Room

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