Government Encourages Increased Investment with US
OCT 31, 2022
By: Savira Ayu)*
The United States (US) has become one of the countries that make Indonesia a destination for investment. Investors from America also play a role in improving the economy in Indonesia.
Various topics became a concern in the meeting between Coordinating Minister Airlangga and Secretary Raimondo, among others, regarding the development of the Indo-Pacific Economic Framework (IPEF) and proposals for Indonesia’s potential infrastructure projects that could be included in the framework of the Partnership for Global Infrastructure and Investment (PGII).
The Government of Indonesia is currently seeking full membership in the Financial Action Task Force (FATF) to play an important role in combating tax avoidance and promoting global tax transparency including anti-money laundering. One of the topics discussed in Pillar 4 regarding Fair Economy in IPEF and the G20 Indonesia Presidency is also related to the important issue of FATF.
During the meeting, the two ministers both paid attention to various strategic infrastructure project proposals that could be collaborated. The meeting concluded with a shared commitment to encourage and involve the US private sector in future investment steps in Indonesia.
Various strategic projects did not escape the attention of the two ministers, including the development of renewable energy sources, clean energy, various projects in supply chain schemes, development of the health industry and development of data centers. Coordinating Minister Airlangga also promoted the potential and capacity of Special Economic Zones (SEZs) in Batam and Central Java for US investment.
Previously, the Indonesian Ambassador to the United States, Rosan Roeslani, said that Indonesia is currently the main choice for investment and trade from the United States compared to other countries in ASEAN. This is because the economies of scale are so large. Until 2021, the value of Indonesia-US trade will increase 36 percent to USD 37 billion. Meanwhile, the investment value increased by 75 percent to reach USD 2.5 billion.
Rosan said, Indonesia has an attraction from its demographic bonus, population size, business scale and Indonesia’s position as President of the G20 this year. Therefore, he believes that Indonesia will get a target of increasing the value of trade to USD 60 billion with the US in 2024.
Meanwhile, the President of the Republic of Indonesia, Joko Widodo, has requested that the value of trade and investment with the US continue to be increased. One of the efforts to achieve an increase in the value of trade and investment is to boost product competitiveness and the business climate in Indonesia.
Rosan also said that employers in the United States welcomed the Omnibus Law on the Job Creation Act. The legislation product is considered to be able to reflect the sustainability of the structural reforms of the economy in Indonesia.
Meanwhile, the Minister of Investment/Head of the Investment Coordinating Board (BKPM) Bahlil Lahadalia is ready to oversee the increase in US investment in Indonesia. He said this after meeting with 12 leaders of US companies in Washington DC. Bahlil emphasized that the Indonesian government is very open to collaborative investment and promotes economic equity.
Bahlil also explained that one of the current government policies is to require collaboration between foreign investment and national entrepreneurs, especially local entrepreneurs and micro, small and medium enterprises in the area where the investment is located. It is of the opinion that a growing investment must be utilized by all, and can grow and grow together.
On the same occasion, the Coordinating Minister for Maritime Affairs and Investment, Luhut Binsar Pandjaitan said that one of the current focuses of the Indonesian government is related to the development of a green economy ecosystem, through the mechanism of energy transition from fossil fuels to renewable energy, restoration of ecosystems such as mangroves, land peat and tropical forests.
According to Luhut, the value added policy implemented by the Government of Indonesia since 2014 has had a positive economic impact, especially in the Covid-19 pandemic situation.
Therefore, the Indonesian government welcomes the interest of foreign investors in sectors related to the green economy ecosystem, especially in the energy transition mechanism and industrial estates, as well as industries with added value.
Air Products Chairman, President and CEO Seifi Ghasemi expressed his appreciation for the support of the Government of Indonesia in ensuring that Air Products’ investment in Indonesia is realized. We believe that Indonesia has a bright future mainly because of Indonesia’s young and dynamic population, abundant natural resources and progressive democratic government that supports investment from various countries.
It should be noted that data from the Ministry of Investment shows that the realization of investment from the US from 2000 to 2021 has reached 19.5 billion US dollars.
The US is one of the countries that has an interest in investing in Indonesia. This, of course, is proof that the Indonesian government is not playing games with its efforts to attract foreign investors to invest in Indonesia .
)* The author is a contributor to the Pertiwi Institute