Indonesia and Hungary plans to establish the an investment fund to support the infrastructure development in the country - Photo by TheInsiderStories

JAKARTA (TheInsiderStories) – Indonesia and Hungary plans to establish the an investment fund to support the infrastructure development in the country, foreign minister told reporters after attended the bilateral meeting between President Joko Widodo and Hungary Prime Minister Victor Orbán at the Merdeka Palace.

“The value of funding coupled with private investment could reach US$1.5 billion,” said foreign minister and trade of Hungary Péter Szijjártó together with Retno Marsudi in a press briefing today (01/23).

In the meeting, President Widodo appreciated the concrete operation of the clean water supply on 36 location in 12 provinces across the archipelago. He also invited Hungary to involved on hospital projects, especially oncology and treatment facilities, e-toll, information technology, and the digital economy.

Hungary is an important partner country of Indonesia in the Central European region. The country with the fastest economic growth in Europe is now the 3rd largest trade and investment partner in the region, with the second largest influx of tourists coming to Indonesia in the region.

In 2019, the trade volume between two countries worth of $164 million. The main commodities traded include electronic goods, shoes, textiles, rubber, and horticultural products.

As reported, Indonesia needs Rp35,43 trillion (US$2,517.71 billion) of investment in five years period to reach the six percent growth. Of the total figures, the government will contribute 9.4 percent, 8.8 percent from state-owned enterprises, and private sectors will cover 81.8 percent.

Based on national medium-term development plan for the 2020 – 2024 period, the authority will boost manufacturing and tourism sectors to reach the target. In addition, the government also will publish a positive investment list in this month to begin promoting priority industries that are open to both foreign and domestic investment.

“The government will issue a positive list in January. This means that if the investment base is still a negative list, now we will change in the omnibus law there are only 6 negative list sectors. The rest are positive lists that are open to foreign and domestic investors,” said Coordinating Economic Minister Airlangga Hartarto recently.

The negative investment list bans or limits foreign investment in certain business sectors to protect local firms against foreign competition. Hartarto said a full investment ban would only apply to selected business sectors, including gambling, cannabis cultivation, chemical weapons, and wildlife trade.

For businesses outside of the selected sectors, the government would instead draw up a priority list for them to welcome more investment

“We will draft a presidential regulation on the priority list, or the positive investment list, particularly for industries that are import-substitution or export-oriented,” said the senior minister.

Hartarto said several sectors that could strengthen Indonesia’ value-added chains were proposed to be included in the priority list, including the coal gasification, automotive and electronics sectors.

The upcoming issuance of the priority industry list will mark a change in the government’s negative list policy. It previously aimed to liberalize some business sectors to welcome more investment as part of its 16th economic policy package, issued in November last year.

In the previous plan to revise the negative list, the government proposed opening up 49 business sectors by allowing foreign owners to have greater stakes or by abolishing the requirement of having to obtain ministry recommendations.

Revising the negative investment list has been widely seen as an important step in attracting more foreign direct investment (FDI) in Indonesia and stimulating the economy. Indeed, the government is planning to mitigate the slowing trend in economic growth, and FDI in particular, by kick-starting reforms and improving procedures for investment.

Indonesia needs FDI to narrow its growing current-account deficit (CAD), which is now at its biggest since the second quarter of 2014. Indonesia’ CAD widened to $7.7 billion in the third quarter of 2019 from $8.2 billion gaps a year earlier, equivalent to 2.7 percent of the country’s GDP.

by Linda Silaen, Email: linda.silaen@theinsiderstories.com