Japan Plans to Invest Rp72,8 Trillion in Indonesia

TEMPO.CO, Jakarta - The Head of Indonesia's Investment Coordination Board (BKPM), Franky Sibarani, said that Japanese investors are planning to cumulatively invest around US$5,6 billion, or equivalent to Rp 2,8 trillion. Their commitment to invest in Indonesia was sealed during President Joko 'Jokowi' Widodo's visit to Japan between March 22 to March 25, 2015. "Scores of investors immediately came up and expressed their interests and commitments to invest in Indonesia," said Franky on Wednesday, March 25, 2015.

Franky explained that a significant chunk of the investment - approximately US$2,46 billion  - is contributed by the automotive sector, by Toyota and Suzuki in particular. Toyota, according to Franku, has offered to invest US$1'6 billion or Rp 2.8 trillion, while Suzuki proposed to invest US$ 1 billion or Rp 13 trillion. Should these proposals are realized, Indonesia's could potentially export three times as much as it currently exports now - up from 60,000 units to around 200,000 units.

BKPM also said that other sectors have attracted the interest of scores of other investors, which totals at around US$3 billion or Rp 39 trillion. Component producers, fisheries and its’ derivative industries, as well as traders in the textile, steel, and shipping and electronics sector have expressed their interest in investing US$1.58  billion or Rp 20.5 trillion in Indonesia. "Many of them have indeed registered for investment permits right away," said Franky.

It is known that between 2010-2014, Japan's investment peaked at US$12.2 billion - the majority of which were invested in the automotive, steel, chemical, textile, and food industry - and created around 424,000 new jobs in Indonesia.

In order to attract more investors, Franky said that the government and BKPM is coordinating to work on several issues that are obstructing the flow of foreign investment into the nation. "One issue that we are focusing on is the issue of transporting materials and goods from ports to plants, and vice versa," he said.

In addition to Japan, the government is also planning to attract even more investors from China, which has been Indonesia's biggest economic trading partner for the past 11 years. Despite the fact that China has always been the nation who submits the highest number of  investment proposals to BKPM, the realization low is among the lowest - with only one out of 10 Chinese investors going through with their investment plans.

Between October 2014 and March 19, 2015, Chinese investors have pledged to invest a total of US$13.6 billion or Rp 177.6 trillion - up from the total amount pledged in the previous period, which totaled at US$2.6 billion.

However, BKPM predicted that only around seven percent of out that total capital pledged will eventually make it into the Indonesian economy. "President Jokowi's visit to China is hoped to be able to attract more investors into the country - especially since he is not only slated to meet with President Xi Jinping and Premier Li Keqiang, but he is also scheduled to attended the BOAO Forum in Hainan," said Franky.

Apart from investors from within the Asian region, Indonesia has also received investment pledges from other nations from Europe - including from one of the world's leading tyre producers, France-based Michelin, who plans to establish a production plant in Indonesia that is slated to begin production in 2019. "Groundbreaking is scheduled for 2016," said the Minister for Industry, Saleh Husin, after having been visited by representatives from the Michelin Group on Thursday, March 26, 2015.

According to Saleh, Michelin will be cooperating with PT Barito Pacific, which will devote some capital into developing rubber plantations in Jambi and West Kalimantan, which is aimed to help Michelin's plan to turn Indonesia into a production base for its' product. "Michelin's product will not only be used to meet domestic demands, as many will also be exported out of the country," said Husin.

ANDI IBNU | FERY F. | AMIRULLAH