D

espite stalling economic recovery amid growing fears of a double-dip recession in the world’s largest economy, the United States’ ambassador to Indonesia ensured that investment plans in Indonesia will remain on track.

“Companies are looking more at the situation here in Indonesia, rather than what’s happening in the US,” Ambassador Scot Marciel told reporters on the sidelines of an Idul Fitri “meet-and-greet” at the official residence of the Coordinating Minister for the Economy, Hatta Rajasa, on Wednesday.

“They will make their judgments based on the overall economy, and also how smooth the environment is.”

Indonesia is trying to lure investors to increase economic activities and provide more jobs in Southeast Asia’s largest economy which aims to be among the world’s ten largest economies by 2025.

US companies, Marciel said, are looking at the variety in the overall environment, namely: economic growth, inflation, bureaucratic processes, as well as tax issues, for their investment plans in Indonesia.

Indonesia’s government has announced a new “tax holiday” regulation that comprises five-to-10 year tax breaks in five industrial sectors: base metal; oil refining; petrochemicals; renewable energy; and telecommunications equipment, with an investment of at least Rp 1 trillion (US$117 million).

“[The new tax regulation] shows a willingness to try to create a better business environment, which I think will encourage people,” Marciel said.

Therefore, when asked whether or not there are signs of a US investment slowdown in Indonesia due to stalling economic recovery in the US, he said: “No, not at all”.

“It’s hard to predict the exact number but we have seen an increase both in bilateral trade and also in investment ... despite
our slowdown. So, I think it’s going quite well.”

The US is one of Indonesia’s major direct investors, injecting $930.8 million in 100 projects in direct investment last year — excluding oil and gas and financial sectors - according to data from the Investment Coordinating Board (BKPM). So far this year, US investment in Indonesia has already surpassed the 2010 figure, standing at $936.1 million in 71 projects.

US companies that have expressed an interest in investing in Indonesia include, among others: construction and mining equipment maker Caterpillar; computing system maker Microsoft; beverage firm Coca Cola; consumer goods producer Procter & Gamble; and electronics and communication technology company Cisco Systems.

Caterpillar’s investment alone could total around $500 million, BKPM chairman, Gita Wirjawan, said.

Finance Minister Agus Martowardojo has specifically urged Hollywood movie distributors to invest in Indonesia. The government wants foreign movie distributors to be locally incorporated in order to promote healthy competition within the nation’s film industry as well as to provide a sufficient supply of movies, following a six-month Hollywood blockbuster drought at local cinemas.

But Marciel said Hollywood distributors cannot invest immediately, as “movies are still on negative lists.

“That’s one of the things that the government and the [film] industry are talking about. And we’re hoping that it will become more open for [foreign] investment,” he said.