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View all search resultsA new paradigm for foreign direct investment
Does foreign investment genuinely strengthen Indonesia's industrial capabilities, technological base and global competitiveness - or is it simply taking advantage of the country's large domestic market?
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Racks of graphics processing units (GPUs) with a closed-loop liquid cooling system are seen on Feb. 4 inside an operational Microsoft data center in Karawang, West Java. (AFP/Yasuyoshi Chiba)
E
very year, Indonesia celebrates the arrival of hundreds of trillions of rupiah in foreign direct investment (FDI). New industrial estates are launched, factories are inaugurated and investment figures are presented as evidence of economic progress.
Yet amid the drive to achieve higher growth, a more fundamental question deserves attention: Does foreign investment genuinely strengthen Indonesia's industrial capabilities, technological base and global competitiveness - or is it simply taking advantage of the country's large domestic market?
The reality is that not all foreign investment creates the same value. Some investors come primarily to serve Indonesia's consumer market. Others bring something far more valuable: access to international financing, technology transfer, stronger corporate governance, talent development and integration into global business networks. This distinction is rarely part of Indonesia's investment policy discussion, yet it should be.
I was reminded of this during a recent visit to Japan, where I conducted a non-deal road show to explore raising funds through the Samurai Bond market. For an Indonesian company, entering this market requires much more than financial strength. It demands credibility, reputation and the confidence of investors. Throughout the process, our Japanese partner did far more than introduce us to potential investors. They opened doors that would otherwise have remained closed. That experience made me realize that the most valuable foreign investors contribute far beyond capital, they provide trust, relationships and access.
Years earlier, I worked with a Japanese partner on a property development project in Jakarta. I assumed the financing would follow the usual pattern: equity from the foreign investor, supplemented by loans from Indonesian banks. Instead, our partner secured financing directly from its headquarters in Japan. Later, when a finance company I founded was acquired by a Japanese investor, expansion was supported by the investor's regional financing center in Singapore rather than domestic bank borrowing.
More recently, I witnessed an even broader form of partnership in a national digital infrastructure company. Our foreign partner actively supported fundraising efforts in Japan, introduced us to institutions previously beyond our reach, strengthened our credibility in international capital markets and invested in developing Indonesian talent. This is what strategic foreign investment should look like. It creates access, builds capability and leaves lasting knowledge behind.
These experiences convinced me that high-quality foreign investors contribute much more than money. They bring international connectivity, new sources of financing, stronger governance, knowledge transfer and the ability to accelerate the growth of local companies.
