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More Japanese Investment in Indonesia

Posted 3 months ago by JAC Consulting Indonesia

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Indonesia has continued its venture to lure global corporations into investing in the country during the annual World Economic Forum (WEF) meeting in Davos, Switzerland this week.

During a meeting with the head of Indonesia’s Investment Coordinating Board (BKPM), Bahlil Lahadalia, held on the sidelines of the WEF’s annual gathering on Tuesday, Japanese chemical giant Mitsubishi Chemical’s senior executive, for example, pledged to invest Rp 2.1 trillion (US$153.51 million) to finance the expansion of its plant in Cikarang, West Java.

Bahlil Lahadalia pledged to support the firm's expansion, which he said would bolster the government efforts toward substituting imports. "We will escort your new investment until it is actualized in Indonesia. Just contact me if there is any problem," Bahlil told Mitsubishi Chemical Holdings Corporation’s chief executive officer Hitoshi Ochi during the meeting.

Bahlil’s intention mirrors President Joko "Jokowi" Widodo's speech in November 2018, when he urged domestic companies to expand downstream industries, boost exports and reduce imports to seize opportunities from the current trade war between the United States and China.

Statistics Indonesia (BPS) showed that Indonesia recorded exports worth a total of $167.53 billion and imports worth a total of $170.72 billion in 2019, making Indonesia’s trade deficit $3.2 billion last year – much lower than the $8.7 billion deficit recorded in 2018.

However, Mitsubishi Chemical was only on top of eight other global corporations that Bahlil initially planned to meet during the event to discuss them investing or expanding their operations in Indonesia.

Bahlil had also invited German engineering firm Siemens Group to invest in the new capital since it had already invested in power plants for China's Belt and Road Initiative (BRI) and vocational education programs.

The government plans to move Indonesia’s capital city from the heavily populated and polluted Jakarta to a now-forested area in the North Penajam Paser and Kutai Kartanegara regencies in East Kalimantan by the end of Jokowi’s second term in 2024.

If the Siemens Group accepts the offer it would be among the global players that had been enlisted to fund the gargantuan project. They include the United Arab Emirates (UAE) Crown Prince Sheikh Mohammad bin Zayed al Nahyan, Japan-based diversified conglomerate Softbank Group CEO Masayoshi Son and former British prime minister Tony Blair.

BKPM also said it has proposed UAE-based luxury hotel chain Jumeirah Group to expand its network in Labuan Bajo (East Nusa Tenggara), Raja Ampat (West Papua) and Wakatobi (Southeast Sulawesi). The group said it promised it would act upon the offer.

From January to September 2019, overall realized investment reached Rp 601.3 trillion, a 12.3 percent increase year-on-year (yoy), BKPM data shows. Domestic investment grew 17.3 percent to Rp 283.5 trillion while foreign direct investment rose 8.2 percent yoy to Rp 317.8 trillion.

 

(source: The Jakarta Post/Jakarta Globe)

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