Chinese investments trending in Indonesia

Chinese investments trending in Indonesia


Jakarta — In the past few years, Indonesia has seen more and more investments from Asian powerhouse China. In 2017, China was ranked as the country with the third-largest foreign investment in Indonesia at Rp 3.36 trillion (US$240 million), a significant increase from Rp 2.66 trillion in 2016. It seems that trend is here to stay. According to data from the Indonesian Coordinating Investment Board (BKPM), investment from China in the January-March of this year was Rp 676.2 billion, an 8.3 percent increase from the same quarter the previous year. BKPM head Thomas “Tom” Lembong said such a phenomenon was a “mathematical trend,” as China is one of the largest economies and the most populous country in the world. “China is the number one trading partner for more than 120 countries and the main source of foreign tourists for Indonesia and for many other countries,” Tom told a press briefing in Jakarta on Monday (30/04). Tom said ongoing smelter projects, particularly the ones in Sulawesi, which are managed by Chinese investors, were among the most reliable investments for the government as they could absorb a large amount of capital. Last month, Indonesia and China signed five contracts worth $23.3 billion part of an initiative. The project consists of several infrastructure projects such hydropower plant development and a facility to convert coal into dimethyl ether, among other projects. Indonesia is also seeking Chinese investments in some of its economic corridors. The government this year has set an investment target of Rp 765 trillion. In the January-March period, the BKPM recorded Rp 185.3 trillion in investment, or 24 percent of the target. The figure is an 11 percent increase from the same period last year. Foreign investments still dominate investments at Rp 108.9 trillion, while domestic investments make up the remainder at Rp 76.4 trillion. Meanwhile, the top five countries or territories of origins for investments are all in Asia: Singapore, Japan, South Korea, China and Hong Kong. Tom said the results were a reflection of the reforms implemented by President Joko Widodo’s (Jokowi) administration. More incremental reforms, he said, were prepared to ensure the investment target would be achieved this year. Tom said some of the reforms had been met with controversy this year, such as Presidential Regulation No. 28/2018 on the utilization of foreign workers, which drew strong and somewhat political reactions as it is considered to privilege foreign workers for job access in Indonesia. However, business people have applauded most of the other reforms, such as the Finance Ministry’s plan to extend its tax holiday program as well as the ambitious online single submissions (OSS) system. “It will take these reforms a while for their actual impact to be seen, so as much as they are a good start, we still need to push the implementation,” said Tom. Responding to the results, Indonesian Chamber of Commerce and Industry (Kadin) deputy chairman Shinta Kamdani agreed that the government still needed to step up its reforms to step up its reforms in order to reach the desired gains. She noted that the OSS system would especially help investors as they were confused by overlapping and mismatched regulations from the central and regional governments. “The government should further harmonize the relationship between the regional and central government,” Shinta said. Furthermore, they should also remember that what is more important than incentives is consistency for all its policies because investors are always here for the long term.” Meanwhile, Eric Sugandi, a project consultant for the Asian Development Bank (ADB) Institute, said the government should make sure not to undermine domestic investors with its reforms.