A couple of articles posted on Invest Indonesia recently are worth taking a closer look at in the context of foreign direct investment (FDI) and the potential opportunities Indonesia has considering its vast resources, dynamic demographics, and strategic location.
The recent elections have also fueled optimism for a continuation of positive economic policies and a continuation of efforts geared toward welcoming more FDI. This coupled with the announcement of 14 more national strategic projects (PSNs) in the sectors of transportation, infrastructure, energy, health, technology, telecommunications, tourism, and education, has savvy investors arguing that Indonesia is poised for exciting growth.
Foreign investors welcome
Invest Indonesia cited a report published by Tempo that these new PSNs aim to actualise equitable development in the country, quoting Haryo Limanseto, a spokesperson from the Economic Affairs Coordinating Ministry, who announced the projects will be in the Riau Islands, Banten, Jakarta, West Java, East Java, East Kalimantan, Central Sulawesi, and Southeast Sulawesi and involve eight industrial zones; two tourism zones; two toll roads; one educational, research, technology and health zone; and one offshore oil and gas project.
Tempo reported that the tourism project alone will be worth IDR 65 trillion (approx. USD 4.1 billion) and will provide opportunities for around 20,000 workers, while the development of a Special Economic Zone (SEZ) in Bumi Serpong Damai (BSD) will draw investments worth IDR 18.54 trillion (approx. USD 1.1 billion) and support 10,000 workers in the fields of education, medical research, the digital economy, technological developments, and healthcare.
The recent relaxation of foreign ownership restrictions means that sectors deemed crucial for economic development and previously inaccessible to foreign investors are now opening doors, including potential opportunities in e-commerce, education, and healthcare, while streamlining investment licensing means fewer bureaucratic hoops to jump through for foreign investors.
Continuity and innovation
It is too early to say what the full impact will be of the new president’s policies, but analysts are predicting a continuation of Jokowi’s pro-investment approach, building on, and expanding the existing framework, potentially introducing further reforms to enhance transparency, improve regulatory efficiency, and strengthen investor confidence.
Word in the boardrooms is that this could potentially lead to an increased emphasis on sustainability by prioritising efforts to attract FDI that aligns with Indonesia’s sustainability goals. And if that is the case, a chain reaction is likely as this could unlock more opportunities in green technology, renewable energy, and eco-tourism, which in turn will need a skilled and adaptable workforce and therefore, drive investments in education, skills training, research, and development to bolster a dynamic innovation ecosystem.
Considerations for foreign investors
While the outlook for FDI in Indonesia is promising, it is worth remembering that careful consideration and risk assessment are crucial elements to your business success, which is why these three key factors are so important:
- Do your due diligence: Research the specific sector you are interested in, understand the regulatory landscape, and look for professional legal and financial advice to navigate the potential risks.
- Partner with a local company: Collaborating with a reputable Indonesian company can provide valuable insights into the local market, navigate cultural nuances, and establish strong business relationships.
- Stay informed: The regulatory environment in Indonesia can evolve quickly and with little warning, so staying updated on government policies and economic trends is essential for informed decision-making.
This is where Seven Stones Indonesia is ideally placed to be your partner in growth. We encourage investment and we forge relationships with like-minded organisations helping to make your business journey in Indonesia a success. According to Terje H. Nilsen, CEO of Seven Stones Indonesia, “the government’s efforts to improve both domestic and foreign investments is making it easier and more transparent to open businesses in Indonesia, and savvy investors are taking notice. Some international financial institutions and consultants such as Wellington Capital Advisory believe that Indonesia may become the fourth largest economy in the world by 2030. And that’s worth taking seriously.”
A golden catalyst for foreign investment
Indonesia’s vision for a “Golden Indonesia” by 2045, as outlined by the National Development Plan (RPJPN), is a powerful motivator for both domestic and foreign investment. This ambitious goal envisions Indonesia as a developed and prosperous nation, a global economic leader, and a society driven by innovation and sustainability.
Foreign investors seeking to contribute to this vision and be part of Indonesia’s growth story do not have to look too far to find a variety of opportunities. By aligning their investments with the government’s strategic priorities, such as infrastructure development, human capital development, and renewable energy, foreign investors can not only generate healthy returns but also contribute to Indonesia’s long-term success.
It is a compelling proposition for international investors. The new political landscape, coupled with the announcement of major infrastructure projects, signifies an exciting chapter for economic growth. By understanding the evolving regulatory landscape, identifying opportunities within strategic sectors, and taking steps to mitigate risks, foreign investors can capitalise on the immense potential Indonesia offers. With careful planning and a long-term vision, Indonesia can indeed become a springboard for success, fostering mutually beneficial partnerships, and propelling the nation toward a prosperous future. This journey towards a “Golden Indonesia” promises to be a collaborative effort, and foreign investors have the opportunity to play a pivotal role in shaping the nation’s bright future. As Indonesia embarks on this ambitious path, the world watches with anticipation, eager to witness the rise of a new economic powerhouse and a beacon of sustainability in Southeast Asia.
Seven Stones Indonesia offers a range of business services, including market entry, country representation, consultancy and advisory services as well as tax and accounting packages. If you would like to learn more and be part of the Golden Indonesia mission, get in touch with us at Seven Stones Indonesia through: