Photo: Barito Pacific

JAKARTA (TheInsiderStories) – The Government of Indonesia has recorded significant growth of foreign investment, following the implementation of its tax amnesty.

Singapore remains the largest source of foreign investment in Indonesia, with last year’s figure from the city-state reaching US$ 8.4 billion, a number constituting 26.2 percent of the total foreign direct investment (FDI) in Southeast Asia’s largest economy in 2017, according to Investment Coordinating Board Chief Thomas Lembong.

Obviously, there is nothing unusual about the Investment Board Chief’s remark. However, further comments he shared about investment from Hong Kong and Singapore is something to take note of.

According to Lembong, Hong Kong and Singapore act as ‘aggregators’. “They collect investments from other countries and then channel them into Indonesia,” Lembong recently remarked.

The Investment Board will thus attempt to trace capital investments made through Singapore and Hong Kong to identify the original investors. This illustrates that it is important for Indonesia to obtain detailed profiles of foreign investors who bring in capital via these two countries.

“In Singapore, there is a large pool of money belonging to Indonesian nationals”, Lembong said.

He then added, “Our money is parked in Singapore, and it returns to Indonesia as foreign investment, which is fair enough.” He had previously served as Minister of Trade in President Joko Widodo’s cabinet.

In addition, Lembong pointed out that there are Indians and Europeans who choose to invest their money in Indonesia through Singapore.

Many wealthy Indonesians famously make Chinese-majority Singapore their ‘second home’, and particularly since 1998 have stashed much of their financial assets there.

Meanwhile, China will be the second-largest foreign investor in Indonesia if Hong Kong is included. Lembong also noted that Japan is the second largest foreign investor in Indonesia if investments from Hong Kong are excluded from Chinese ones.

In 2017, Japan’s investments in Indonesia totalled $5 billion, while China ranked third with $3.4 billion. Meanwhile, Hong Kong invested $2.1 billion in 2017, relatively higher than the $2 billion entering from South Korea.