Indonesia is targeting to attract more investment from China to spur its economy, on the back of its improving investment environment and promising economic potential.“I call on Chinese entrepreneurs to be far bolder in investing in Indonesia, taking into account its positive economic outlook matching those of BRICS countries,” said Mr. Imron Cotan, Indonesia Ambassador to China at the Seminar Investment Opportunities in Indonesia held on Oct. 11 in Beijing.
“The combination of Indonesia’s positive GDP growth, improving investment climate, stable macro-economic policies and political stability, has made Indonesia a very attractive destination for foreign investors,” he added.
According to Imron Cotan, the Master Plan on the Acceleration and Expansion of Indonesia’s Economic Development 2011-2025, officially launched by Indonesian President Susilo Bambang Yudhoyono in May 2011 has opened up more possibilities for Chinese investors to invest in the various projects contained therein, in the fields of infrastructure, energy and mining, agribusiness, special economic zone and tourism.
The Master Plan is an economic acceleration program aimed to develop the six economic corridors in Indonesia. The Plan needs around$600 million (RMB 3.8 trillion).
Indonesian economy, the largest in Southeast Asia, is maintaining steady growth these years. A report by the World Bank said that Indonesia’s economy would remain resilient against threats posed by stalling economic recovery in the United States and Europe. The report forecasts that Indonesia’s economy will expand to 6.1 percent this year and 6.3 percent next year, according to Xinhua.
Statistics showed that last year, foreign direct investment (FDI) in Indonesia reached$27.39 billion, surpassing the set target. In the first quarter of this year, the FDI soared 32.8 percent. Moreover, Indonesia has $150 billion reserve and low inflation rate.
Earlier this year, Indonesia received investment grade rating from two international agencies for its economy’s soundness and proved resilience.
Further, Indonesia, as a member of the “the trillion club” due to its total GDP, has a huge market with its 240 million people. The middleclass population is also burgeoning, signifying a strong domestic consumption.
“Therefore, the Indonesia market presents opportunities for Chinese business wanting to tap into the significant domestic consumption base,” said Imron Cotan. “Chinese products are widely available in Indonesia. Relocating production plants to this market is highly recommendable not only in order to lower the cost of production, but also to shorten the line of distribution.”
In order to attract FDI, the Indonesian government has consistently improved its investment climate through policy reform packages covering key areas of concern of private investors, such as taxes, customs, investment frameworks and the financial sector, Imron Cotan said.
Furthermore, the government offers special economic zones where overseas companies will enjoy preferential treatment, ranging from corporate income and land taxed reduction to nonfiscal incentives. Investment over $100 million will be tax-free for 10 years.
Xu Ningning, Executinve Secretary-General of China-ASEAN Business Council Chinese Secretariat, suggested Chinese enterprises understand more about Indonesia, such as the relative economic policies and industrial planning and the key industries to attract FDI, and enter the country to grasp business opportunities with the preferential policies of China-ASEAN free trade area.
According to Xu, China’s trade volume with Indonesia rose 11.9 percent from January through August compared with the same period last year. In the first seven months of this year, investment from Chinese enterprises amounted to $340 million, up 341 percent year on year. Now Indonesia is the second largest investment destination for Chinese enterprises in the ASEAN.
China is Indonesia’s biggest trading partner, with total trade between the two countries totaling $60.5 billion last year, the Jakarta Post reported.
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