While the Indonesian economy is still concentrated in the island of Java, with 58.48 percent contribution to the GDP, lucrative investment opportunities can be found across Indonesia. For a more outstanding balance of economic developments across all regions, the Ministry of Investment/Investment Coordinating Board (BKPM) encourages equal investment distribution beyond the island of Java. As the biggest archipelagic state with rich natural resources, the islands’ opportunities await are as diverse as its nature.
Papua and West Papua
The easternmost region of Indonesia, Papua, is abundantly rich with natural resources and equally impressive beauty. Today, it’s essential to protect the forests and coastal areas of Papua and West Papua from degradation, as nature plays a vital role in people’s welfare, socioeconomic equality, and sustainable development.
The governments of Papua and West Papua, together with Yayasan IDS, developed a green growth plan (GGP) and green investment blueprint (GIBP) for both provinces. The GIBP contains information about the commodities being cultivated in the two areas with good market potentials that are culturally appropriate and acceptable for local communities.
A green investment scheme to support the plan was proposed at the High-Level Meeting on Green Investment for Papua and West Papua in February 2020. Under the scenario, the private sector is expected to invest in low carbon and deforestation-free development involving locally-established value chains that will benefit the local economy. The potential revenue from this scheme reaches the amount of up to USD200 million per year, which will improve the livelihoods of 60,000 families across both provinces.
Many commodities that the two provinces offer to investors. They include fast-track commodities such as cocoa, arabica coffee, nutmeg, and high potential items such as seaweed,
vanilla, and robusta coffee. Opportunities also lay in fisheries and ecotourism. Aside from the outstanding natural produces, the latter sector possesses ample opportunities for development due to the two provinces’ rich and unique cultures, marine wildlife, and terrestrial beauty. One famous example is the Raja Ampat Islands, already well-known for its stunning coral islands and diving destinations.
Putting the blueprint into action requires private investment, catalyzed by ten years of blended finance, technical assistance, and locally established value chain task forces. The local and central governments have shown their commitment to development by establishing local infrastructures and improving communication capacity to local communities. This simultaneously set the environmental agenda while strengthening the relationship with the local communities by creating awareness for selected commodities.
Regarding the investment realization, the data of 2021 shows a pretty good rank for both Papua and West Papua. 91 FDI projects amounted to USD954,3 million for Papua, while West Papua receives USD32,5 million from 60 FDI projects.
By quarter 3, 2021, there are 261 FDI projects in South Sulawesi, contributing a total of USD195,2 million investment realization to the province. With more than three times the larger marine area than its landmass, Indonesia’s agroindustry potential, particularly fisheries and aquaculture, is immense. One of the most potential commodities in this category is seaweed, of which Indonesia already produces more than a third of the global seaweed production. Central to its production is Sulawesi, as South Sulawesi is the highest seaweed producer in Indonesia, primarily in the regencies of Pangkep, Maros, Takalar, Jeneponto, Bulukumba, Sinjai, and Selayar.
Seaweed contributes a considerable amount to South Sulawesi’s exports. In 2019, the export value of 130 tons of seaweed from the province was USD138 million. The demand for seaweed also keeps increasing every year, primarily from China, Chile, the Philippines, Hong Kong, Vietnam, Japan, Korea, and Brazil.
While the province alone contributes 18 percent of global red seaweed production and supports the livelihoods of 40,000 households, the vast majority of it is not processed or refined in South Sulawesi. Instead, it is sent elsewhere for processing, limiting Indonesia’s role in the seaweed global value chain. Some strategies to answer this challenge include increasing seaweed productivity and quality, developing the processing industry near the areas of seaweed production, and developing consumable seaweed businesses on micro to industrial scales.
Efforts to expand Indonesian seaweed’s global market, such as creating the Tropical Seaweed Innovation Network (www.seaweednetwork.id) digital platform to connect stakeholders, also prove valuable in facilitating cooperation and innovation.
Regarding investment bureaucracy, South Sulawesi has proven itself to be innovative. Aside from the numerous awards it has received, the province developed a regional investment potential information system (SIPID) as a management tool for potential investment information, investor complaints, and website-based regional regulations to facilitate business operations.