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Sixteen companies relocate to RI amid downturn
The investment of 16 firms setting up production sites in Indonesia last year is estimated at US$7.15 billion and expected to create around 68,600 jobs.
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ixteen companies have relocated to Indonesia from mainland China, Taiwan, Japan, South Korea and the United States despite the overall global downturn in investment due to the COVID-19 pandemic last year, an official has said.
Investment Coordinating Board (BKPM) head Bahlil Lahadalia said Thursday that the companies had either started construction or production last year. The investment was estimated to reach US$7.15 billion and create around 68,600 jobs.
“Back in 2018 and 2019, when the trade war between China and the US broke out, not a single company was relocating [to Indonesia],” Bahlil said in a virtual discussion held by media outlet Kompas. “In 2020, regardless of the COVID-19 pandemic, we managed to get at least 16 companies."
In 2019, President Joko “Jokowi” Widodo said he was upset because none of the 33 companies relocating from China to the Southeast Asian region chose Indonesia.
Read also: RI eyes relocation of Japanese firms amid low investment
Indonesia has been working to attract more investment into the country to help boost economic growth. Investment, which accounts for around 30 percent of the country’s gross domestic product (GDP), shrank 9.71 percent year-on-year (yoy) in the third quarter, or deeper than the contraction of 3.49 percent yoy recorded by the economy as a whole.
Bahlil also said on Thursday that American healthcare product manufacturer Johnson & Johnson, South Korean glass manufacturer KCC Glass and food and beverage company Heinz ABC had committed to either relocating or diversifying their production sites with new factories in Indonesia.
Some 14 other companies have shown interest in relocating to the country with possible investment totaling $19.68 billion. The government has also identified 122 potential companies to relocate to the country with expected investment reaching around $40.5 billion.
The relocations came at a time when Indonesia saw a 5.1 percent yoy decline in realized foreign direct investment (FDI) to Rp 301.7 trillion ($21.6 billion) in the January–September period, according to data from the agency.
Overall realized investment reached Rp 611.6 trillion as of September, or around 74.8 percent of the government’s target for 2020. For this year, the government has raised the target by around 5.05 percent to Rp 858.5 trillion.
To lure more investment and thus reach the target, the government is promoting a 4,000-hectare industrial park in Batang regency of Central Java. The industrial park offers various incentives, such as waived land rents for five years.
LG Chem, the largest South Korean chemical company, and KCC Glass have committed to developing their manufacturing facilities on 90-ha and 40-ha plots of the industrial park, respectively.
“The government will take care of the licensing and land acquisition processes,” said Bahlil. “These are the measures we will take to bolster investment realization in 2021.”
