Why Indonesia

Investment Climate

1. Low Labour Cost

For centuries Indonesia has been developing many experienced laborers in this sector. In 2010, more than 40% of Indonesia’s total workforces of 107,405,572 are employed in the agricultural sector. Additionally, compared to other countries, even China and India, Indonesia still has a comparative advantage over labor cost.

Graphic 1. Labor Cost (2009)

2. Large Domestic Market
 

With a population of approximately 240 million, Indonesians spend up to 50.6% of their household income on food. A growing demand, both locally and globally for food, feed, fuel and fiber, places agricultural production and food security high on the national agenda.

The importance of technology supply and utilization becomes more critical in improving the efficiency and productivity of farming and food processing machines. This could be seen as an opportunity for the investors to invest and participate in research and development (R&D) programs for better food and agriculture practices in Indonesia.

3. Supporting Government Program
 

The Government of Indonesia is committed to overcoming challenges for food security by establishing food estates across the country, designed to stimulate large-scale investment in the agriculture sector and beef up food security. The developers will have some allocation towards domestic supply until the nation’s food needs have been met, before they are able to export.

One pilot project under development is located in the Eastern most province of Indonesia of Papua – where 1.6 million hectares of land in Merauke is being transformed into an integrated farming, plantation and livestock zone, where companies will grow, process and package their products in one place. Rice and corn will be the key staple commodities of the estate, with around 600,000 ha of the estate’s total being allocated for food crops.

Production is aimed at 2 million tons of rice and corn, 167,000 tons of soybeans and 2.5 million tons of sugar. Should this program be a success, Papua itself still has 2.49m ha worth of land that is suitable for future agricultural use.

Another government program aimed at diversifying food staple products is the Food Diversification and National Food Defense Enhancement Program 2010-2014 (“Program Peningkatan Diversifikasi dan Ketahanan Pangan Masyarakat”), by the Food Security Agency. The program’s aim is to promote the diversification of the production of food starch-based staples other than rice. This program gives the opportunity for investors to develop and market alternatives of new food products as a part of the food diversification.

Stronger Investment Climate

Indonesia’s economic policies are on a firm footing. So are its measures to attract foreign investment. Below are a few of Indonesia’s latest improvements to our investment climate:

For information about Investment Law No. 25/2007. please click here

This updated investment law redefines “capital investment” as all investments, whether by domestic or foreign investors, for the first time offering equal treatment to all investors. There is no longer a limit of 30 years on foreign investment permits, and gone is the provision in Law 1/1967 for there to be divestment. Additionally, the new law allows for the unimpeded reparation of capital.

One-stop-shop (PTSP) and National Single Window (SPIPISE)

BKPM has launched a one-door integrated service (PTSP) and an electronic automation platform for investment licenses and non-licensing services (NSWi) to not only reduce the number of procedures and amount of documentation needed to invest in Indonesia, but also to bypass the need to physically come to our offices to apply for certain services. The new system has revamped internal processes and rectified human resource constraints to increase the speed and improve the quality of investor services. The system was first launched in January 2010 in the Free Trade Zone and Free Port of Batam.
 

 

President Joko Widodo (Jokowi) said Indonesia already enters years of low inflation, with inflation around 3 percent in the past two years.
President of the World Bank group, Jim Yong Kim, here on Tuesday expressed his support to the Indonesian governments plan on the tax reform program, which aimed to increase the state budgets income.
President Joko Widodo (Jokowi) plans to visit Turkey to develop partnership in strategic industry and economy with the country, Foreign minister Retno Marsudi said here on Monday at the state palace after a meeting prior to the presidents visit to Turkey and Germany.
Indonesian Foreign Minister Retno Marsudi and her Maldivian counterpart Mohamed Asim will hold a bilateral meeting in Jakarta on Wednesday (June 21) to discuss the cooperation in tourism sector.
The United Nations Food and Agriculture Organization (FAO) has praised Indonesia for its role in fighting illegal, unreported, unregulated (IUU) fishing, the Indonesian Embassy in Rome said.
Indonesias real GDP growth is projected to increase from 5.2 percent this year to 5.3 percent in 2018, according to the World Banks June 2017 Indonesia Economic Quarterly.
Jakarta (ANTARA News) - Former president of the United States, Barack Obama, is scheduled to deliver a keynote speech at the opening session of the 4th Congress of Indonesian Diaspora in Jakarta on July 1, 2017.
Jakarta (ANTARA News) - Indonesian Minister of Foreign Affairs Retno Marsudi spoke by phone with her counterparts of the Middle East in a bid to ease the crisis between Qatar and a group of Arab countries.
Tokyo, Japan (ANTARA News) - Indonesian Vice President Jusuf Kalla and Japanese Prime Minister Shinzo Abe discussed accelerating the development of medium-speed railway facilities on the Jakarta-Surabaya route during a bilateral meeting after the 23rd International Forum: Future of Asia.
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