Indonesia is an amazing country with abundant natural resources. However, the COVID-19 pandemic caused several challenges for Indonesia’s economic growth. Despite facing challenges, the investment ministry in Indonesia is committed to help speed up the economic recovery. To increase investment realization, the government has made sure that Indonesia’s investment potential is well known. So, what are the investment potentials in Indonesia?
Why Invest in Indonesia
Before going into investment potentials, it’s good to have an idea of why investors should invest in Indonesia. There are two main reasons, the first is economic growth and the second is demographics.
The economic condition in Indonesia has had some difficulties at the beginning of the pandemic, but in the third quarter of 2021, it has gained positive growth. Statistics Indonesia (BPS) has announced that Indonesian economic growth in the third quarter of 2021 grew by 3.51% year-on-year (yoy). Looking at the demographics, Indonesia has demographic bonuses. This means that there is a higher population of productive age in Indonesia than the non-productive population. According to the BPS, the impact of the demographic bonus will be experienced in 2020-2035.
Investment Potential in Indonesia
The Minister of Investment/Chairman of BKPM has created a strategic project of investment potentials in Indonesia. The project map will allow investors to invest with ease in Indonesia as it will give them a clearer idea of what the investment opportunities are in Indonesia.
There are two main purposes of the strategic project map of investment potentials in Indonesia. The first is equitable investment in all regions of Indonesia and not concentrated in one particular area. With the equal distribution of investment, economic growth in Indonesia will be evenly distributed and minimize inequality in economic growth between regions in Indonesia. The second is that it will help in making it easier for investors to invest in Indonesia. An informative and comprehensive study will assist investors in making decisions to invest in Indonesia. With this study, investors do not need to conduct a feasibility study, which generally costs IDR 1-2 billion.
The strategic investment opportunity map divides investment potentials into several sectors. The sectors are Tourism, Agriculture, Development of Renewable Energy, and Digital Sectors. For a long time, tourism has been one of the sectors that contribute the most to Indonesia’s GDP. This is because Indonesia’s abundant natural resources has made it one of the most wanted tourist destinations. Agriculture is also an essential sector as availability of food is critical. The increasing population in Indonesia means that there will also be a large demand for food. Thus, leading to great investment potential in agriculture. Digital sectors are growing rapidly and are becoming crucial as most start-ups nowadays are application-based. Lastly, Indonesia is working on developing renewable energy. This sector is also a great investment potential.
Hopefully, the strategic project map can help give investors a clearer view of investment potentials in Indonesia. Increase in investment growth will lead to equal distribution of economic growth in Indonesia.
Priority Industries in Indonesia
The Indonesian government has also prepared a list of priority industries as well as special economic areas to invest in Indonesia. Investing in priority industries and special economic areas will make investors entitled to receive incentives. The fiscal incentives provided consist of tax incentives and customs incentives. The incentives are income tax for investment in certain business fields and/or in certain areas (tax allowance) and corporate income tax reduction or tax holiday.
Incentives are not the only perks that investors will receive when investing in Indonesia. Investors will be guaranteed to have ease in licensing, provision of supporting infrastructure, guarantee of energy availability, guarantee of availability of raw materials, immigration, employment, and other facilities in accordance with the provisions of the legislation.
There are so many investment potentials in Indonesia. The government has made it easy for investors to invest by preparing a map of strategic project investments, a list of priority industries, as well as ease in licensing, energy availability, immigration, employment, and many more. Investing in Indonesia will not only mean that investors are investing in a country full of natural resources, but also that they will have great support from the government in their business endeavours.