Posted on 20 Apr 2015
The Indonesian Embassy in China
plans to set up a special working unit in the near future to provide
information for Chinese investors on doing business in Indonesia, its top
official has said.
The special unit, called the investment desk, is expected to boost Chinese
investment in Indonesia as current investment is low as a result of limited
information for investors, according to Indonesian Ambassador to China Sugeng
Rahardjo.
Sugeng said there was a common perception among Chinese investors that
Indonesia had complicated procedures for investment and a lack of legal
certainty, besides other problems concerning infrastructure and land
acquisition.
“Chinese investors don’t have enough information on Indonesia’s business
potentials and investment procedures, which have been improved by the
government through one-stop investment licensing,” Sugeng said as quoted by
Antara news agency recently.
Sugeng is convinced the one-stop investment licensing service, which was
introduced by the Investment Coordinating Board (BKPM), can play a role in
solving problems faced by Chinese businesspeople interested in investing in
Indonesia.
In addition, Sugeng revealed that President Joko “Jokowi” Widodo had assigned
the Indonesian Embassy in China to help generate US$80 billion worth of Chinese
investment in Indonesia by 2020, equal to 17 percent of foreign direct
investment pledged for 2015-2019.
“The President gave the instruction after visiting China last month. Despite 40
percent of Chinese foreign investment flowing to Asia-Pacific countries, the
percentage invested in Indonesia remains small,” Sugeng added.
BKPM data show that foreign direct investment from China to Indonesia stood at
$800 million out of total $23.92 billion investment in Indonesia as of last
year. The amount flowed into 501 projects, making it Indonesia’s eighth largest
investor.
Despite not being among the top five countries investing in Indonesia, China
upgraded its position after it was ranked 13th by the end of the third quarter
last year.
However, other BKPM data reveal that between 2005 and 2014, China only realized
$1.8 billion, or 7 percent, of its $24.27 billion planned investment in
Indonesia.
China is currently struggling to keep its economy on track as its growth
declined to 7 percent in the first quarter of this year from 7.3 percent the
previous quarter, following its government’s decision to focus more on domestic
consumption instead of trade and investment amid global weakening.
BKPM head Franky Sibarani previously said that China was one of several
prioritized Asian countries — besides Singapore, South Korea and Taiwan — that
would be targeted for more marketing efforts to attract investment.
Franky also acknowledged that extra effort should be made as the fulfillment of
Chinese investment plans often met problems, such as a lack of knowledge about
Indonesia and lengthy procedures to process investment licenses.
In order to reach the goal, Franky said the investment board would take a more
proactive approach with Chinese investors and maximize its special investment
management team.
“We will also collaborate with the Indonesian Embassy and affiliated economic
bureau in China. Another effort is to open an investment promotion office in
Beijing to increase interest from local firms,” Franky added.
During Jokowi’s visit to China in March, a number of Chinese firms expressed
interest in investing in Indonesia and inked at least 30 deals with Indonesian
business partners.
The agreements amounted to $63.40 billion in direct investment, with $24.9
billion of it to be channeled to infrastructure projects, such as the
development of power plants, seaports, telecommunication networks and railways.
In February, Chinese-owned local cement firm SDIC Papua Semen Indonesia started
the construction of its $500 million integrated facility in South Manokwari,
West Papua, with a total production capacity of 3 million tons per year.
