FDI in Indonesia: Japan Remains Committed to Invest, says Kankeiren
Japanese companies remain committed to invest in Indonesia - particularly into infrastructure, power and manufacturing - according to the Kansai Economic Federation (Kankeiren), one of Japan's private, non-profit representative economic organizations. Kankeiren Chairman Shosuke Mouri met Indonesia's Chief Economics Minister Darmin Nasution on Monday (07/03) in Jakarta. Japan is one of the biggest investors in Indonesia. During the period 2010-2015 the country invested a combined total of USD $14.9 billion in Indonesia.
Although Japan was not selected to develop the first high-speed railway in Indonesia (this Jakarta-Bandung railway project went to Chinese investors), it remains interested to handle other infrastructure projects. Mouri added that Japan is also interested to develop businesses in other sectors, particularly now the Indonesian government has opened room for foreign direct investment through the revision of the Negative Investment List (this revision is part of the government's tenth economic stimulus package).
Nasution commented on the meeting with Mouri saying he invited Japanese investors to invest in infrastructure (particularly toll roads and power stations). Other lucrative investment opportunities for Japanese companies, according to Nasution, are Indonesia's healthcare, pharmaceutical and rubber sectors.
As the domestic economy of Japan is still plagued by contraction (GDP growth contracted 1.1 percent year-on-year in the fourth quarter of 2015), it is more attractive for Japanese investors to look abroad. Indonesia is one of those emerging economies that still needs billions and billions of US dollars in investment in order to improve the quality and quantity of the nation's infrastructure. The lack of adequate infrastructure in Indonesia causes high logistics costs and curtails foreign investors' interest to invest in the country.
Data from the Indonesia Investment Coordinating Board (BKPM), the investment services agency of the Indonesian government, show that Japanese investors invested a total of USD $14.9 billion into Indonesia in the years 2010-2015. Most of these investments went into Indonesia's transportation sector, followed by the metal, machinery & electronics sector.
Total Japanese Investment into Indonesia:
| 2010 | 2011 | 2012 | 2013 | 2014 | 2015 | |
| Japanese Investment (in billion USD) |
0.7 | 1.5 | 2.3 | 4.7 | 2.7 | 2.8 |
Source: BKPM
Japanese Investment into Indonesia per Industry in 2010-2015:
| Industry | Value (in billion USD) |
| Transportation | 7.5 |
| Metal, Machinery & Electronics | 2.4 |
| Chemicals & Pharmaceuticals | 0.9 |
| Housing, Industrial & Offices | 0.7 |
| Food | 0.5 |
Source: BKPM
One of the Japanese companies that showed its commitment to invest in Indonesia is the Toyota Motor Corporation. The company invested IDR 2.3 trillion (approx. USD $174 million) to develop a new factory in Karawang (West Java). This is part of the company's total commitment to invest a total of IDR 20 trillion (approx. USD $1.5 billion) up to 2019, making Indonesia its production base. Through its unit Toyota Motor Manufacturing Indonesia, the company now owns five factories in Indonesia: two in Sunter (North Jakarta) and three in Kawarang (East Java).
Top 10 Foreign Investors in Indonesia in 2015:
| Country | Value (bln USD) |
Number of Projects |
| Singapore | 5.9 | 3,012 |
| Malaysia | 3.1 | 913 |
| Japan | 2.9 | 2,030 |
| Netherlands | 1.3 | 421 |
| South Korea | 1.2 | 2,329 |
| Hong Kong | 0.9 | 422 |
| USA | 0.9 | 261 |
| British Virgin Islands | 0.7 | 549 |
| China | 0.6 | 1,052 |
| Great Britain | 0.5 | 267 |
Source: BKPM
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