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Record FDI - and now easier to get started

Article - April 4, 2012
The government has been working hard to improve the nation's business and investment climate, and boost its appeal for foreign involvement in the country's development

“There ought to be more indonesian students studying in the U.S. and vice versa. it is something Obama recently flagged up”

Gita Wirjawan, former Chairman of BKPM and recently-appointed Minister of Trade

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“Our role is to work as a partner of the government so they can improve the business climate. we understand how the business world works.”

Suryo Bambang Sulisto,
Chairman of KADIN, the Indonesian Chamber of Commerce & Industry

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“Now is the right time to issue bonds with lower yields for Indonesia.
The percentage from the loan portfolio in foreign currency is about 16%..”

 

Zamzam Reza,
President Director of
AAA Investment
 

Last year Indonesia received a national record amount of $20 billion in foreign direct investment (FDI). “If we use data from the Jakarta Stock Exchange, in 2015 we will have around 3 million investors, up from 400,000 currently,” says Zamzam Reza, President Director of AAA Investment.

During an official visit to Beijing in March, President Susilo Bambang Yudhoyono announced that Chinese and Indonesian companies had signed partnership agreements on infrastructure, mining and steel projects in Indonesia worth more than $17 billion. “The sectors in which cooperation has been established include seaports, roads, alternative energy, the motorcycle industry, mining, construction in strategic areas and the Sunda Strait, plantations, tourism, and the steel industry,” he said. Also, in the two weeks alone prior to the President’s visit, Japanese companies – including Honda Motor Co., Nissan Motor Co. and Sharp Corp. – announced massive expansion plans in Indonesia totaling more than $1 billion in investment.

“Our biggest challenge is infrastructure development. Without that, you cannot expect that we will become an efficient and competitive economy,” says Suyo Bambang Sulisto, Chairman of KADIN, the Indonesian Chamber of Commerce and Industry.

Gita Wirjawan, Chairman of the Indonesia Investment Coordinating Board (BKPM) and Minister of Trade, says: “The new land acquisition law will provide certainty with respect to timing and pricing for anyone requiring land for infrastructure development whether it is roads, airports, power generation and more. We have not had this for a long time, over 30 years, so this will be a game changer.” The BKPM has implemented a one-stop shop system to minimize bureaucracy and its National Single Window for Investment (NSWi) enables investors to apply for license and non-license services online.

Indonesia’s Ambassador to the U.S. highlights ample opportunity for greater American participation, saying: “There is a lot of American investment in oil and mining, but there are many more promising sectors, such as the health sector, and I would like to see more American manufacturing in Indonesia. I definitely think the IT sector could benefit, as well as other sectors where there is a lot of innovation needed.”

In January, Indonesia received its second credit rating upgrade in as many months, as Moody's ratings agency restored its debt to investment grade, raising its rating to Ba1 from Baa3 with a stable outlook. The country’s rise above speculative grade for the first time since the 1997 Asian financial crisis is likely to encourage further foreign investment. In December, Fitch returned Indonesia to an investment grade rating, citing steady economic growth, declining debt and general macroeconomic stability.

“We are a haven for investment,” says Raja Oktohari, Chairman of the Indonesian Young Entrepreneurs Association (HIPMI). “We are one of the 10 biggest countries in the world for investment, with a substantial number of our economy’s sectors not being built up or touched by the investors. I think that with President Yudhoyono’s MP3EI program we can, for the first time, communicate this huge potential effectively to the international community.”

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