Companies such as Samsung Electronics, Foxconn, Mitsubishi, Jollibee Foods and Ichitan Group are some companies that have declared to invest in Indonesia or considering so.
They are driven by lower labour costs, political stability and a large domestic market with increasing consumer spending power. As per official balance of payments (BOP) figures, the net foreign direct and portfolio investment into Indonesia stood at US$23.2 billion last year.
Similar to the previous two years, about 60 per cent went toward foreign direct investment (FDI) in plant, equipment and other business ventures whereas the remainder came in the form of portfolio investment, purchases of equity and debt securities.
With the exception of china, the net inflows exceeded those by any other Asian country at 2.7 per cent of nominal gross domestic product (GDP). Singapore, Hong Kong, Thailand and Malaysia experienced net portfolio outflows in 2013, so did Taiwan, Korea and the Philippine, but they also saw net FDI outflows.
Only a few other Asian economies can take pride in similar ups in flows. Although, India, Taiwan and Thailand also showed improvements, they did not show the same scale and surely not regarding FDI and portfolio both. It shows the ease of the general election in April and the victory of the pro-reform Joko “Jokowi” Widodo as the president in July was crucial in enhancing investor confidence and sentiment.
His past record as the mayor of Surakarta and governor of Jakarta is an indication for his investor-friendly policies. His team has identified industries like manufacturing, food and tourism as key sectors for accelerating economic growth, with focus on eco-tourism and improving tourist infrastructure.
Indonesia ranking in corruption has also gone down in recent time which is another factor for international investors together with the government’s plans to make government tenders and other processes online.