Investor from Japan and South Korea aimed to build electronic factory in Indonesia - Photo by Ministry of Industry Office

JAKARTA (TheInsiderStories) – Investor from Japan and South Korea aimed to build electronic factory in Indonesia, government official told TheInsiderStories early this week. Currently, the  government is working hard to bring in investors to the country, especially in manufacturing sector.

“There are some big ones from Japan and Korea. Hopefully there will be an increase in momentum (investment) in the second semester,” said Minister for Industry Airlangga Hartarto early of this week but he reject to give further detail on the plan.

Currently, the government aggressively spurring investment in the industrial sector because it is considered capable of providing multiple effects and strengthening the structure of the national economy. Various strategic policies have been issued to create a conducive business climate in the country.

“From the results of our meeting with investors, they see that Indonesia is still the main destination for investment,” said Hartarto.

He revealed, Indonesia is considered to have the opportunity to develop the manufacturing industry through a large market and the availability of a competitive workforce. Investment Coordinating Board reported in the second quarter (2Q) of 2019, investment value in the manufacturing industry sector robust.

During April-June, the contribution of the manufacturing sector to the domestic direct investment (DDI) was Rp22.2 trillion (US$1.55 billion) or above the previous period worth of Rp16.1 trillion.

The three supporting sectors namely the food industry which disbursed funds amounting to Rp12.3 trillion, then the chemical and pharmaceutical industries Rp3.6 trillion, and followed by the metal, machinery, electronics, watch and optical industries Rp2.2 trillion .

The contributions included the timber industry Rp667 billion, textile industry Rp662 billion, paper and printing industry Rp653 billion, rubber and plastic industry Rp652 billion, nonmetal mineral industry Rp586 billion, and motor vehicle also other transportation industries Rp562 billion.

Meanwhile, the contribution of the manufacturing sector to foreign direct investment (FDI) in 2Q of 2019 touched $2.5 billion or higher in the previous quarter at $1.9 billion. The three sectors that support are metal, machinery, electronics, clock and optical industries, which invested more than $1 billion, then chemical and pharmaceutical industry $391 million, and motor vehicle and other transportation industries $332 million.

Then, food industry of $323 million, the non-metallic mineral industry of $127 million, the rubber and plastic industry of $95 million, the textile industry of $83 million, and the paper and printing industry of $69 million.

The minister emphasized that the increase in investment indicated that there was industrial growth and additional production capacity in the country. “A number of producers make Indonesia as their production base,” he said.

This has become a good momentum, besides being able to meet the needs of the domestic market, it is also encouraged to fill the export market and produce substitution of imported raw materials.

“Certainly investment provides a multiplier effect in the context of increasing the added value of domestic raw materials, absorption of local labor, and foreign exchange earnings from exports and taxes,” said Hartarto.

He continued, the government had initiated a strategic step in the effort to revitalize the national manufacturing industry sector through the adoption of industrial era 4.0 technology. This is stated in the Making Indonesia 4.0 road map, which has great aspirations to make Indonesia among the 10 countries with the strongest economy in the world by 2030.

He also optimistic that investment will continue to increase as the tensions between the US and China trade wars continue. In addition, supported by political and economic conditions in Indonesia which remained stable after the implementation of the 2019 elections.

“In fact, the government has issued regulations that can not only be interesting for manufacturing, but also to foster innovation centers in Indonesia,” he said.

US$1: Rp14,300

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