Investment in Manufacturing Sector Reduces Dependence on Natural Resources
In the first quarter of 2013, Indonesia's manufacturing sector has received increasingly more investments compared to the same period last year. Investors directed IDR 53.26 trillion (USD $5.5 billion) towards Indonesia's manufacturing sector out a total of IDR 93 trillion (USD $9.6 billion) investment in Q1-2013. Compared to Q1-2012, investment in the manufacturing sector grew 84 percent. It is a positive development as it reduces Indonesia's dependence on natural resources, produces added-value products, and provides employment opportunities.
Foreign investors invested IDR 42.33 trillion, while domestic investors invested IDR 10.92 trillion in Indonesia's manufacturing sector. Most of the foreign funds went to chemicals and pharmaceuticals, metal, machinery and electronics, and the automotive and other transport equipment.
Foreign investment directed to Indonesia's automotive industry has been a hot topic as companies want to benefit from Indonesia's recent car sales boom (in combination with the country's current low car per capita ratio). Toyota, Daihatsu, Nissan, General Motors, and Volkswagen have raised their investments in Indonesia in order to increase production capacity.
Indonesia's paper and pulp industry recorded an impressive 509 percent growth (YoY). According to the Indonesian Pulp and Paper Association, Indonesia is currently the world's ninth largest pulp producer and the seventh largest producer of paper products. The chairman of the institution said that Indonesia's pulp and paper industry has ample opportunity to grow as the country has vast forests and contains trees that grow three to four times faster than in subtropical and colder regions.
Q1-2013 Foreign Investment in the Indonesian Industry Sector:
| Industry | Investment Q1-2013¹ |
Investment Q1-2012¹ |
Growth year-on-year |
| Chemicals and pharmaceuticals |
1,228.2 | 373.9 | 228% |
| Metal, machinery and electronics |
1,041.9 | 500.1 | 108% |
| Automotive & other transport equipment |
866.4 | 448.9 | 93% |
| Paper and printing |
579.3 | 95.1 | 509% |
| Food | 405.5 | 384.8 | 5% |
| Textiles | 234.3 | 161.9 | 45% |
¹ in US dollar
Source: BKPM