Indonesia Creates New Ministry Of Investment
May 08, 2021

Indonesia’s government established a new Ministry of Investment on April 28 to make it more convenient for domestic and foreign investors to do business in the country through a one-stop service authority.

The Ministry of Investment is the result of upgrading the bureaucratic status of the Investment Coordinating Board (Badan Koordinasi Penanaman Modal, or BKPM, a government agency mandated to boost domestic and foreign direct investments, into a fully-fledged government ministry.

The chairman of the BKPM, Bahlil Lahadalia, will assume the new role of Minister of Investment.

Latest data show that total foreign investment realisation and domestic diaspora investments in 2020 amounted to 826 trillion rupiah ($57.16 billion), up from 817 trillion rupiah ($56.57 billion) in 2019, despite the Covid-19 pandemic. The government has targeted a total investment realisation of 900 trillion rupiah ($62.32 billion) for 2021.

Foreign direct investments increase further into 2021

Total investment realisation for the first quarter of of 2021 has seen a further uptick compared to the same period in 2020. Between January and March this year, Indonesia saw a total investment realisation of 219.7 trillion rupiah ($15.21 billion), an increase of 4.3 per cent. This is nearly 25 per cent of the government’s full-year investment target.

Investments outside the economic hub of Java increased by 11.7 per cent in the first quarter annually, while investment in manufacturing dominated, namely in the metal, metal-based goods, non-machinery and equipment category, food manufacturing, as well as automobile manufacturing. Investments in housing, industrial estates, and office buildings contributed further.

Singapore, China, South Korea at the lead

Singapore continued to be the number one source of foreign direct investment in the first quarter with $2.6 billion in investments into 3,634 projects. China came second with just over $1 billion, followed by South Korea, Hong Kong and Switzerland.

Overall, first quarter foreign direct investments have created more than 300,000 new jobs, BKPM data show.

The new ministry is seen as part of the government’s ongoing business reforms to attract foreign investments into the country and create jobs. The Ministry of Investment seeks to become a key point in connecting and synergising both domestic and foreign investments, it said.