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Jakarta Post

Indonesia seeks to attract firms departing China

  • Dzulfiqar Fathur Rahman

    The Jakarta Post

Jakarta   /   Tue, June 23, 2020   /   05:14 pm
Indonesia seeks to attract firms departing China An applicant submits documents to the Investment Coordinating Board’s (BKPM) One-Stop Integrated Service in Jakarta on Dec. 1, 2015. (JP/Ricky Yudhistira)

The government has established a special task force to attract businesses leaving China and facilitate their relocation to Indonesia.

American, Japanese and South Korean companies are reportedly in discussions with the Investment Coordinating Board (BKPM) over their potential relocation to the Batang and Brebes industrial districts in Central Java, which are currently under development.

According to BKPM head Bahlil Lahadalia, the agency has completed 60 percent of the relocation process for some firms.

“I gave the task force three tasks, namely detecting firms planning to relocate, analyzing the ease [of doing business] offered by other countries and, importantly, making a decision in a negotiation,” Bahlil stated in a press release on June 19.

The establishment of the task force was part of the government’s efforts to minimize the economic impact of COVID-19 on foreign direct investment, which fell 9.2 percent year-on-year (yoy) to Rp 98 trillion (US$6.9 billion) in the first quarter of 2020.

The coronavirus outbreak, which was first detected in China, has strained Indonesia’s foreign direct investment as projects have been delayed as a result of social restrictions to contain the spread of the virus. The pandemic has also disrupted global supply chains and has made some companies question their heavy reliance on China.

Bahlil, who formerly led the Association of Young Indonesian Entrepreneurs (HIPMI), declined to provide details of the businesses planning to relocate to the country, saying that he was “waiting for the President himself to announce them”.

BKPM data shows that Japanese firms invested $604 million in the first three months of this year, making it the fourth-largest country of origin for foreign direct investment in the period. South Korean firms were the eighth largest, investing $130.4 million, followed by the United States with $114.1 million.