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Investment in Indonesia is More Inclusive

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Indonesia is an investment-friendly country that is open to anyone. The government has also committed to building a more inclusive investment climate which is expected to lead to community welfare.

Deputy for Controlling Investment Implementation at the Ministry of Investment/BKPM Imam Soejoedi said that the positive results achieved by investment in the first quarter of this year were inseparable from President Jokowi’s expertise in attracting foreign investors.

BKPM commented regarding the reason for the surge in investment in the first quarter of 2022 which was recorded at Rp 282.4 trillion, an increase of 28.5 percent. This is achieved through a series of accommodative and innovative policies to encourage investment in the country.

Imam Soejoedi added, this investment was made possible thanks to the constructive, innovative policies of President Joko Widodo who know how to encourage economic growth and investment growth. In this case, the combination of these policies, investment in Indonesia is expected to be more inclusive. This is indicated by the distribution of investment in Java and outside Java.

In fact, over the last three years, the implementation of investments outside Java has succeeded in surpassing Java. Imam noted, in the last three years, investment outside Java grew by more than 50%. So that the investment focus is not only java-focused or java-centric. Investment in Indonesia certainly encourages economic growth from Sabang to Merauke.

Investment Minister Bahlil Lahadalia said, as a reflection of economic equality in Indonesia, investment growth outside Java is currently quite stable and continues to increase significantly. In the first quarter of 2022, the realization of investment outside Java was Rp. 148.7 trillion, an increase of 16.6% from the fourth quarter of 2021, which was Rp. 127.5 trillion.

Investment growth outside Java is seen by the entry of Riau and Central Sulawesi into the top five investment locations for PMA and PMDN. Meanwhile, the three provinces outside Java with the largest FDI investment realization, namely Central Sulawesi in the first place with a percentage of 12.9%, followed by Riau 9.9% and North Maluku 7.3%.

Bahlil also said that he received orders from President Jokowi to realize inclusive and quality investment, namely a balance of investment realization in Java and outside Java, increasing the added value of natural and mineral resources, as well as the growth of new economic centers in the region. For this reason, all units in the Ministry of Investment / BKPM with out of the box efforts take steps to achieve inclusive investment.

Bank Permata’s chief economist, Josua Pardede, has predicted that Indonesia’s investment performance in the second quarter of 2022 will still improve, especially in the mining sector in line with soaring commodity prices.

Josua also explained that in the first quarter of 2022, the mining sector was one of the sectors that recorded the highest investment value, both from domestic investment and foreign investment. Domestic investment in the mining sector was recorded at Rp. 18.39 trillion during that period, while foreign investment in this sector was recorded at US$ 1.17 billion. With commodity prices still tending to be high in the second quarter of 2022, it is estimated that investment related to mining will remain relatively high.

In addition to the mining sector, Josua also estimates that investment prospects in sectors related to the sustainable economy will also be high, such as nickel, which is needed to become a substitute for fuel dependence. Meanwhile, the Ministry of Investment/BKPM noted that the realization of investment in the first semester of 2022 was IDR 282.4 trillion, an increase of 28.5 percent on an annual basis (year on year / yoy).

The increase in investment realization shows that business prospects in Indonesia are getting better. This was reinforced by the increase in global commodity prices, which pushed the derivative sector in Indonesia to experience improved performance. Sectors that recorded high investment performance were the transportation, warehousing and communication sectors, which recorded Rp 26.97 trillion for domestic investment and US$ 0.87 billion for foreign investment.

The existence of investment in Indonesia will of course also have an impact on increasing economic activity, so that the post-pandemic economic recovery in Indonesia will be faster due to the implementation of inclusive investment.

Ruli Adisasmita, Author is a contributor to the Nusa Bangsa Institute

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