Photo: Privacy

JAKARTA (TheInsiderStories) – Indonesia is making major investments in the expansion and modernization of its overburdened infrastructure. Ambitious road and rail projects along with the construction of additional power plants will help the fast-growing economy and population become more efficient.

In the past decades, most foreign investment to Indonesia went to the industrial estates around Jakarta, but recent years have shown that in terms of economic development, the center of gravity is shifting eastwards across the island of Java, while in the longer run new opportunities await investors in regions across the entire archipelago.

Transportation between the country’s other major cities is also being improved with the construction of the Trans-Java, a roughly 1000 km-long continuous highway. There are plans for modernizing the existing train route between Jakarta and Surabaya and for building high-speed rail to drastically reduce travel times between Java and Bandung.

This matters need to be addressed by the all candidates who will fight for governor title in regional election especially in Java Island.

Hundreds of figures have declared their intention to fight for the seat of regional heads, though not all of them have registered to the Regional Election Commission.

In every 17 provinces that will hold elections have appeared more than one candidate pairs. This number may change if there is a candidate who is not registered or declared eligible by the Election Commission.

In East Java, the former Minister of Social Khofifah Indar Parawansa will be paired up with young economist and mayor of Trenggalek Emil Dardak. They will face Syaifullah Yusuf and Puti Guntur Soekarno as rival to figh governor title in East Java.

Its neighbour Central Java, the current Governor Ganjar Pranowo will face the former Energy Minister Sudirman Said who fully supported by the opposition Gerindra Party. The highlight investment issue of Central Java is Rembang Cement Factory which still spark controversy among local farmers and state-owned cement producer PT Semen Indonesia Tbk (IDX: SMGR).

Meanwhile in West Java, prospective participants in the province that has about 32.7 million voters are Deddy Mizwar-Dedi Mulyadi, Ridwan Kamil-Uu Ruzhanul Ulum, Sudrajat-Ahmad Syaikhu, and Tubagus Hasanuddin-Anton Charliyan.

Figures from the Investment Coordinating Board (BKPM), the agency tasked with promoting and coordinating investment in Indonesia, suggest that measures to spur development outside the industrial heartland of western Java are bearing fruit.

The proportion of direct investment – both foreign (FDI) and domestic (DDI) – in Jakarta and West Java declined from 45.4 per cent of the total in 2010 to 26.8 per cent in 2017. The importance of East Java gained over the same period, as the province reaped 16.8 per cent of total realized direct investment in 2014 compared to 11.6 per cent in 2017.

Domestic investors are particularly fast to embrace opportunities in Central Java and East Java, increasing their investment more than 10-fold and 3-fold, respectively, from 2010 to 2013, while reducing their commitment to West Java.

Central Java and East Java are increasingly on the radar of manufacturers, not least because space closer to the capital has become crowded and minimum wages in the area have increased to the highest levels nationwide.

In addition, a high-speed rail line being built across the island will connect more closely Jakarta and Surabaya and all the cities on the route.

Larger than Central Java in terms of both population and area, East Java surpassed Jakarta to become the third-most popular location with foreign direct investors in 2017, behind only the industrial core provinces of West Java and Banten.

Among domestic investors, East Java, which is seeing particularly fast development in the SME sector, easily beats all other provinces. Having committed itself to infrastructure improvements, the provincial government in Surabaya is seeking investment in the construction of port projects, rail links and toll roads

The construction of freeways, train lines and power plants is not a simple matter in Indonesia. Chinese and Japanese investors are currently financing and building a majority of the projects.

Regional Heads Should Participate

Previously, President Joko Widodo has said that the government will continue to reform its regulations and had offered incentives in an effort to boost investment.

He added that the central government would coordinate closely with local governments to roll out reform packages that would, in the end, enable the government to set up a “single submission system” for all business and investment permits.

The single submission system is intended to ease the licensing process and significantly cut down the waiting period for businesses.

He has reminded his ministers and regional government heads several times to simplify the business license process to attract more investors to the country in the competitive global investment climate.

“If we delay, the funding will go to countries that already offer a better investment climate,” the President said on Monday during a Cabinet meeting at the Presidential Office.