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Offering Legal Certainty, Indonesia Becomes the Main Destination for Global Investment

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By: Fathya Meidiana)*

Indonesia must be a destination country for investors to invest, with this of course the government cannot stay silent and wait for investors to come, but Indonesia must also be able to offer legal certainty so that investors are more interested in coming to Indonesia.

The Chamber of Commerce and Industry (KADIN) welcomes various plans by global investors to invest in Indonesia. One of them is Tesla Inc, which is an electric vehicle manufacturer from the United States (US) for a giant power bank or energy storage system (ESS) project. It should be noted that Tesla has again expressed interest in investing in Indonesia after two years ago having canceled its plans.

Arsjad Rasjid as Chairman of KADIN said, currently Indonesia is indeed becoming one of the investment destination countries. In the last two years alone or during the Covid-19 pandemic, investment flows to Indonesia have continued to grow. In 2020, investment realization was recorded at IDR 826.3 trillion, growing 2.06% (yoy). Meanwhile in 2021 it will grow 9.0% (yoy) to Rp 901.02 trillion. In fact, from this data, foreign investment grew the most, at 10% (yoy) or Rp 454 trillion. Meanwhile, this year, the government targets to realize an investment of Rp 1,200 trillion.

Arsjad said that the opportunity to reach that number is not impossible, especially since there are two potential moments for Indonesia, where this country becomes the G20 and Business 20 (B20) Presidency.

Indonesia is the only country in ASEAN that can host the G20-B20 event. Of course, this will not be wasted to attract investment in all fields. For B20, KADIN is appointed as the organizer who will lead the forum. The priorities carried out in the B20 are also in line with the G20 priority themes, namely innovative progress, inclusiveness and collaborative growth. Especially for the B20 forum, Arsjad said it would give Indonesia the opportunity to gain the trust of the global community and grow an investment center in the Southeast Asian region.

B20 is a very strategic forum and forum for dialogue because it brings together top companies with high credibility from G20 member countries to be able to invest in Indonesia. Investments that are encouraged are primarily innovation-based and collaborative to create inclusive and sustainable economic growth.

In the previous year, a number of companies had announced that they would carry out innovation-based investments in Indonesia. For example, the investment from the Hyundai Motor Company-LG Energy Solution consortium worth USD 1.1 billion to create an electric vehicle ecosystem. This investment has even begun with the construction of an electric vehicle battery cell factory in Karawang, West Java. In this segment, the government has also pocketed investment commitments from Foxconn’s Hon Hai Precision Industry.

Likewise in the coal sector, in November 2021 Investment Minister Bahlil Lahadalia managed to lock in an investment commitment of USD 15 billion from Air Products and Chemical Inc from the United Arab Emirates. The investment agreement for this mega-project is the establishment of a gasification facility for the conservation of low-value coal into high-value-added chemical products such as dimethyl ether, methanol and other chemicals.

Then Philip Morris International through its affiliated company PT HM Sampoerna Tbk. (HMSP) in November 2021 also disbursed USD 166.1 million to invest in building a heated tobacco product production facility that is also based on innovation and research. The production facility, which is scheduled to be operational in the fourth quarter of 2022, will meet domestic and export market demands in the Asia Pacific region.

Another innovation-based investment that must be accelerated is digital technology. Therefore, KADIN fully supports this digital technology-based investment. In 2025, the growth value of digital economists is projected to reach USD 146 billion. Innovation-based investment will be important as this will accelerate economic growth.

Investment is able to offer various developments and progress in the economic sector, this is because investment will cause a multiplier effect such as one of which is the absorption of labor, so this will further reduce the unemployment rate in Indonesia.

)* The author is a contributor to Pertiwi Institute

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