M

ore foreign investors are tapping into the flourishing Indonesian cinema industry as Singapore’s sovereign wealth fund GIC is pouring Rp 3.5 trillion (US$260 million) into Indonesia’s largest cinema chain of Cinema 21 and Cinema XXI outlets.

GIC Pte announced on Monday it had entered into a strategic partnership with PT Nusantara Sejahtera Raya, which runs Cinema XXI, Cinema 21 and The Premiere outlets to help expand the Indonesian firm’s “cinema footprint nationally to provide world-class entertainment for Indonesians across the country”.

“The investment by GIC reflects our confidence in Indonesia’s long-term growth potential” that hinges on “the rapidly expanding consumer class and economic development in Indonesia”, said Amit Kunal, GIC head of direct investments group for Southeast Asia, in a statement.

Nusantara Sejahtera currently operates 826 movie screens in 152 different locations, accounting for nearly 74 percent of the 1,117 screens in the archipelago, a figure deemed too small by industry players for the country’s over 250 million population.

GIC’s investment in the Indonesian cinema sector came after the nation’s second-largest theater operator CGV Blitz was acquired in 2015 by South Korean firm CJ CGV Co. Ltd with a plan to quadruple the number of its screens in Indonesia to 600 by 2020. CGV Blitz declined to comment for this story.

Lippo Group’s Cinemaxx cinema operator also expects to triple its movie screens to around 250 this year as part of its greater ambition to create a network of theaters with 2,000 screens across 85 cities in 10 years.

The movie market, one of dozens of sectors that the government liberalized in February, is increasingly whetting the appetite of overseas companies. Previously, the so-called “negative investment list” shut most of the sector to foreigners.

The removal of the cinema sector from the negative investment list allows foreign investors to fully own local cinemas, film production houses and distribution firms.

Nusantara Sejahtera founder Benny Suherman noted that the partnership with GIC was expected to help tap into the “tremendous opportunities” ahead in providing “affordable entertainment to Indonesians and supporting the local film-production industry”.

“We are excited to partner with GIC, which has strong experience in successfully supporting businesses in Indonesia,” Benny said.

The venture is GIC’s latest investment in Southeast Asia’s largest economy, after it said in October that it would team with an Indonesian warehouse provider, PT Mega Manunggal Property, to invest in warehouses in the nation.

GIC has been seeking to boost returns after warning that record-low interest rates and subdued global growth would weigh on investment performance in the coming decade, Bloomberg reported.

The fund in July said a key measure of returns fell to 4 percent in the 20-year period to March 31, from 4.9 percent in the period ended March 2015, as global stock markets posted lackluster performances and bond returns tumbled.

Previously in May, Association of Indonesian Film Producers (APROFI) chairperson and film producer Sheila Timothy commented that the foreign investment trend that had been seen in Indonesia was a result of the rising middle class and untapped movie-ticket market.

“The film-going culture [in Indonesia] is alright, but what people are seeing is the opportunity to take this large share. Compared to ours, the cinema markets in South Korea or the USA are stagnating,” she commented.