JAKARTA: Four Japanese firms will pour US$1.32 billion into Indonesia over the next few years in various sectors, from automotive to cattle breeding, the Investment Coordinating Board (BKPM) said here the other day.
The biggest portion — $600 million — will come from a Japanese automotive firm seeking to build a manufacturing facility in Bekasi, West Java, according to BKPM data.
Another firm will spend $260 million to build a surfactant factory in Dumai and Riau in Riau province and Cilegon in Banten province.
The two other firms will develop a theme park in Greater Jakarta and a cattle breeding facility in West Java with investments of $430 million and $25.8 million, respectively.
The firms had already consulted with the government about their planned investments, but had yet to apply for investment permits, BKPM deputy chief for investment promotion Himawan Hariyoga said here the other day.
“We have to clarify and confirm [certain aspects] before they apply for principle business permits,” Himawan said during a gathering of Japanese CEOs at his office.
A committed investment can take several years to realize. After securing principal business permits, investors must secure permanent business licenses to begin their projects.
In the past five years, total Japanese investment approved by the board amounted to $23.7 billion. However, only $12.1 billion out of the figure has been realized, hampered by various obstacles, which the BKPM is now trying to address through its “de-bottlenecking program”.
Japanese companies have always been among the top foreign spenders in Southeast Asia’s largest economy. Nevertheless, investment tumbled by nearly half to $2.7 billion last year from $4.7 billion in 2013 as investors had exercised caution on account of the general election and the political upheaval it could cause.
The proposed Japanese investment follows a string of investments that rushed into Indonesia to tap into enormous potentials in the sizeable market of 250 million people after a peaceful election.
The BKPM recorded that at least 18 firms were already seriously committed to injecting $18.7 billion into several sectors between last October and December, soon after the new government took office.
Apart from the four firms with the serious commitment, another four Japanese firms are also exploring the possibility of building a power plant in Sei Mangkei, North Sumatra, a purified terephthalic acid factory at an undetermined location, a fishery processing facility at an undetermined location and waste management installation in Tangerang, Banten.
Japanese firms are not the only companies to recently express their commitment to investing in Indonesia. On Wednesday, at least 16 South Korean companies voiced their commitment to spending up to $17.1 billion in a variety of fields, such as power generation, mineral processing, labor-intensive manufacturing and import-substitution industry.
Indonesia will continue to serve as a favorite investment destination for Japanese firms across Asia and Oceania in the future, according to Mitsutoshi Okabe, the vice president of the Jakarta office of the Japan External Trade Organization (JETRO).
The estimate is based on a survey carried out by JETRO from Oct. 10 until Nov. 14 last year, engaging 4,700 Japanese firms operating in the region.
Indonesia was ranked the fourth most-wanted investment hub for them after Cambodia, India and Bangladesh.
Steady economic growth, a huge domestic market and rising incomes are factors that have boosted the attractiveness of the country as an investment destination, according to the survey.
