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INDONESIA’S INVESTMENT TRENDS IN 2018

INDONESIA’S INVESTMENT TRENDS IN 2018

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BACKGROUND

Plan to plan. Growth and development are never happenstance nor are they a product of complacency, denial, or obstinacy. No, countries evolve from solid, executable, and bal-anced strategies. Indonesia vows to be no exception. In fact, the Indonesian government is currently carrying out a 20-year overall long-term development plan for the 2005 to 2025 time frame. Implementation targets are divided into a 5-year medium-term plan, known as RPJMN or Rencana Pembangunan Jangka Menengah Nasional (National Medium-term Development Plan). Furthermore, every RPJMN has different field priorities for development.

As we enter 2018, Indonesia is in its fourth year of the RPJMN stage for the 2015 to 2019 period as well as in its overall third phase in the long-term national plan as mentioned above. In this period, the Government of Indonesia (hereinafter referred to as “GoI”) contin-ues to focus on such sectors as infrastructure development and social assistance programs re-lated to education and health-care. 1 Looking toward to the future, the current RPJMN plan pinpoints several major fields still to be developed such as (i) human development and (ii) main sector development. In the field of human development, GoI shall focus on developing further programs related to education, health, and housing. Within the scope of the main sector development plan, it shall focus on developing food sovereignty, energy power sovereignty, maritime and marine, tourism, and industry.

In line with RPJMN, the GoI efforts to increase investments into Indonesia, especially foreign direct investment, were solidified when the GoI issued President Regulation Number 44 Year 2016 concerning “A List of Closed Business Fields and Open Business Fields with Requirements in the Field of Investment” (“President Regulation 44/2016”) or commonly known as “Daftar Negatif Investasi” or “DNI” (Negative List of Investment). This President Regulation replaces the previous regulation, namely President Regulation Number 39 Year 2014.

Based on that President Regulation 44/2016, the GoI expanded greater opportunities for foreign investors to conduct their investment in Indonesia by removing approximately 35 (thirty-five) business fields from the previous DNI such as the crumb rubber industry, cold storage, tourism, film industry, electronic trading transaction (marketplace based platform, dai-ly deals, price grabber, on-line classifieds) with investment values of less than Rp.100.000.000.000 (one hundred million Indonesian Rupiah), toll road concessions, management and disposal of non-hazardous waste, and raw materials medicine industry. No doubt, Indonesia has designed change to be far-reaching.

1Worldbank website (http://www.worldbank.org/en/country/indonesia/overwiew#1)


CURRENT CONDITIONS

Unmistakably, the wide-range approach to development shows no sign of waning. Case in point, several regulations issued within the last three years by GoI through the President Joko Widodo, geared to enhance interest from foreign investors to consider Indonesia, have made quite an impact. In fact, Indonesia has climbed to 4th place from 8th place among the world’s top investment destinations, following only to US, China, and India. (UNCTAD, July 2017).

Furthermore, based on Badan Pusat Statisitik (Central Bureau Statistic) of Indonesia’s reports, there are several business fields that still indicate significant foreign investor interest and pro-jected participation namely the industry, mining, transportation, warehouse, communication, and agriculture sectors.

However, some sectors have not quite lived up to expectations. Specifically, within the last 3 (three) years, industry and mining have shown a decline in performance in terms of investment absorption. On the other hand, other sectors show rich potential.

With the GoI policies that encourage infrastructure development, the last 3 (three) years have demonstrated that road infrastructure is booming. Not only is this surge expected to further increase the volume of transportation and trade between regions throughout Indonesia, but GoI also expects it to crossover to an upturn in transportation investment as well as the other relating fields.

Besides the positive industry trends mentioned above, the Chairman of BKPM states that within the coming years two more business fields have surfaced in demonstrating strategic investment potential: tourism and e-commerce.

Clearly, investment opportunities still abound despite a few disappointments in certain sectors.


by : Naz Juman Gulinazaer, founder of Schinder Law Firm

Jakarta, 07 February 2018




INDONESIA’S INVESTMENT TRENDS IN 2018