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peaking at the APEC CEO Summit in Beijing last week, President Joko '€œJokowi'€ Widodo invited business leaders to invest and set up open businesses in various economic sectors in Indonesia, assured them that '€œin Indonesia, it is no longer business as usual'€ when it comes to business licensing.

However, his presentation at the business summit caused mixed reactions back home. Many praised the speech as a welcome invitation for foreign investors to help develop the Indonesian economy, but some also criticized Jokowi'€™s message as a blatant act of selling the country to foreigners.

I think that this fear about the President trying to '€œsell the country'€, though, is unfounded.

In fact, what the President was trying to offer the CEOs was the opportunity for foreign direct investment (FDI). FDI is an investment made by a company in fixed assets such as factories or utilities in a foreign country.

The benefits of FDI have gained considerable support in economic and financial literature.

This is due to the fact that the role of FDI in increasing the welfare of the host countries is well-grounded theoretically and supported by plenty of empirical evidence, albeit some studies argue that this should be accompanied by improvements in the investment framework through better macroeconomic and institutional conditions.

A 2013 OECD survey revealed that the five countries that attract the most FDI are those with either high growth or high income, namely China (US$253 billion), the US ($175 billion), Brazil ($65 billion), the UK ($63 billion) and France ($62 billion), although we should take their GDP into consideration.

Another type of foreign investment is the portfolio investment (as in stocks and bonds), which is short-term and a lot more volatile. Unlike portfolio investment, FDI is a robust wealth-enhancing type of foreign investment.

From the side of prospective investors, the decision to invest directly in a foreign country involves a long-term commitment and careful calculation, because FDI physical projects cannot leave the country instantly.

The next question is, then, how can FDI be beneficial to host countries?

First, FDI opens up job opportunities in the host country, transfers soft skills through training and job-creation, brings in advanced technology to the domestic market and provides access to research and development resources, known as knowledge spillovers.

Second, FDI companies pay taxes to the host country. More tax revenues mean lower government budget deficits and more money to build public facilities.

FDI can also lead to greater competition as new foreign companies are usually of a high standard in terms of technological advancement and good corporate governance. Therefore, competition from foreign companies can lead to productivity gains and greater efficiency in the host country.

What I find particularly notable about what President Jokowi said to the CEOs was that he invited them to invest in infrastructure projects.

Infrastructure is extremely beneficial to boosting economic growth, yet investment in infrastructure, besides requiring a lot of funds, is also quite long-term in nature.

Infrastructure is the catalyst for economic growth. We need seaports, airports, roads, bridges, public transportation and other infrastructure facilities to transfer our economic products across the 5,120-kilometer Indonesian archipelago.

Furthermore, we need them to facilitate the transportation of our export products to overseas markets. An efficiency gain from the lower cost of transporting export goods leads to better competitiveness in the international market, thereby bolstering exports and reducing current account deficits.

Infrastructure is also important for reducing income and wealth inequality through lower costs and consequently lower consumer prices.

This in turn leads to lower inflation, a chronic problem for our archipelago, which consists of thousands of islands not well-connected with each other by efficient transportation services.

However, building an infrastructure project is highly challenging. It is extremely expensive, time consuming and highly uncertain in terms of profitability.

Of course, FDI is not the only source of funds for infrastructure projects. The national budget and national private sectors can also be sources of funding.

However, our national budget and national private funding are limited.

While some may worry that foreign cooperation or investment may jeopardize our national interest, the government has the authority to impose the necessary terms and requirements on FDI in this sector.

Furthermore, our national firms can benefit through the transfer of skills, expertise and technology from foreign investors.

FDI can even help make Indonesian companies become more competitive overseas.