Vision Group Report: Invigorating the Indonesia-EU Partnership
Vision Group Report: Invigorating the Indonesia-EU Partnership Vision Group Report: Invigorating the Indonesia-EU Partnership
58 1. INDONESIA – AN IDEAL INVESTMENT LOCATION The Investment Coordinating Board of The Republic of Indonesia (BKPM) encourages investment in ‘remarkable Indonesia’ - targeting total investments for 2011 of 26.4 billion USD. Indonesia is promoted for its democratic rule, economic potential, natural resources, large and growing domestic market and young and technically trained work force. Indonesia is the world’s fourth most populous country, a G-20 member and has a growing middle class and a strategic geographical position in the region, especially towards other ASEAN countries. The UNCTAD ‘World Investment Prospects Survey’ identifies Indonesia as part of the top ten attractive destinations for foreign direct investment (2009-2011). Indonesia is close to reaching investment grade by the beginning of 2012, as indicated by two major rating agencies (S&P and Moody’s) that recently upgraded their ranking of Indonesia. 2. SUPPORTED BY INCREASED INTEREST AND FIGURES According to BKPM, total realised investment (both domestic and foreign direct investment) amounted to 23.0 billion USD in 2010, a 54.2 percent increase from 2009. FDI in Indonesia is becoming increasingly geographically diversified, with investment realisation outside Java increasing by 174 percent from 2009 to 2010. The EU remains Indonesia’s second largest source of FDI (after Singapore) and this trend is expected to continue throughout 2011. Share of FDI realisation in Indonesia by country of origin: Country 2005 2006 2007 2008 2009 2010 Singapore 24% 8% 36% 10% 40% 31% EU 9% 31% 10% 13% 18% 17% Japan 13% 15% 6% 9% 6% 4% South Korea Source: BKPM. 5% 8% 6% 2% 6% 2% 3. INCLUDING FROM THE EU It is estimated that EU’s total investment in Indonesia amounts to 66 billion USD, with over 700 EU companies present in Indonesia, employing over 500,000 people, but there is potential for much larger figures. EU investors focus on sustainable development, fair employment conditions and high quality products, services and technological solutions. 3000 2500 2000 1500 1000 500 0 Source: BKPM. 821.2 III INDONESIA-EU INVESTMENTS FDI to Indonesia from the EU (MUSD 1871.6 1018.7 1972.6 2006 2007 2008 2009 2010 2776.5
Data collected from an investment survey conducted by the EU Delegation in Jakarta displays that the main sectors of EU investment include electronics, construction, chemical and pharmaceutical industry, power generation, mining and manufacturing of non-metallic mineral products. 4. … BUT NOT ACCORDING TO ITS POTENTIAL However, although EU is the world’s largest source of investments, only 1.6% EU investment to Asia goes to Indonesia. Even though Indonesia’s population represents 45% of all ASEAN countries, it only receives 10% of FDI designated to ASEAN and only 7% of EU investments to ASEAN go to Indonesia. EU companies prefer investments in other ASEAN countries mainly due to better trade and investment climate, fewer restrictions on foreign investment and even more rapid economic growth rates. Source: Eurostat. Average EU FDI to Asia 1999 - 2009 - EUR M / % Rest of Asia, 29 055; 75.1% Indonesia, 618; 1.6% Rest of ASEAN, 8 991; 23.3% 59
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- Page 11 and 12: often be accentuated by the combina
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Data collected from an investment survey conducted by <strong>the</strong> <strong>EU</strong> Delegation in Jakarta displays that <strong>the</strong> main sectors<br />
of <strong>EU</strong> investment include electronics, construction, chemical and pharmaceutical industry, power generation,<br />
mining and manufacturing of non-metallic mineral products.<br />
4. … BUT NOT ACCORDING TO ITS POTENTIAL<br />
However, although <strong>EU</strong> is <strong>the</strong> world’s largest source of investments, only 1.6% <strong>EU</strong> investment to Asia goes to<br />
<strong>Indonesia</strong>. Even though <strong>Indonesia</strong>’s population represents 45% of all ASEAN countries, it only receives 10%<br />
of FDI designated to ASEAN and only 7% of <strong>EU</strong> investments to ASEAN go to <strong>Indonesia</strong>. <strong>EU</strong> companies prefer<br />
investments in o<strong>the</strong>r ASEAN countries mainly due to better trade and investment climate, fewer restrictions on<br />
foreign investment and even more rapid economic growth rates.<br />
Source: Eurostat.<br />
Average <strong>EU</strong> FDI to Asia 1999 - 2009 - <strong>EU</strong>R M / %<br />
Rest of Asia,<br />
29 055; 75.1%<br />
<strong>Indonesia</strong>,<br />
618; 1.6%<br />
Rest of ASEAN,<br />
8 991; 23.3%<br />
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