Indonesia’s investment growth fosters labor-intensive job absorption

   

Despite impacts from the COVID-19 pandemic, Indonesia ventures to meet its investment target of Rp900 trillion in 2021. During January-September 2021 period, the investment realization has reached Rp659.4 trillion or 73.3 percent of the target.

The largest investment realization contribution from domestic companies (PMDN) is from the housing, industry and office; transportation, warehousing and telecommunication; electricity, gas and water; construction; as well as food, agriculture sand farm sectors. These sectors’ contributions amount to Rp63 trillion or 19.2 percent of the PMDN’s total contribution. The top five investment realization contributions are acquired based on project locations: West Java, East Java, DKI Jakarta, Central Java, and Banten.

Meanwhile, for foreign direct investment companies (PMA), the top investment realization contribution comes from the metal industry and metal goods; transportation, warehousing and telecommunication; mining; food industry; as well as electricity, gas and water. Singapore, Hong Kong, China, Japan, and the Netherland are the top five PMA to invest in these sectors in Indonesia.

As a result, 912,402 Indonesians were employed to work in local and foreign direct investment companies during the aforementioned period. Ministry of Investment/BKPM stated that the labor absorption has increased from 311,793 workers in the first quarter, 311,922 workers in the second quarter, and 288,687 workers in the third quarter. “The increase was caused by the investment growth in labor-intensive sectors. In return, the demand for labor has gone up because of the trend,” said Bahlil Lahadalia, Indonesia’s Minister of Investment.

Ministry of Investment/BKPM aims to realize Indonesia’s 2045 Vision by inviting investments supporting industry independence and economic transformation. At the moment, a 10-gigawatt hour lithium battery factory for Hyundai’s electric vehicle is being constructed in Bekasi, West Java. With an integrated electric vehicle factory, South Korea’s Hyundai has committed to making Indonesia its first manufacturing center in Southeast Asia. The company’s investment realization has reached Rp12 trillion, with the production process on March 2022. Undoubtedly, the investment will open more employment opportunities in the future.

The Indonesian government is also committed to attracting more investment. President Joko Widodo has requested the Ministry of Investment/BKPM to meet the 2022 target of Rp1,200 trillion for local and foreign investments. The investment brings multiplier effects such as stimulating industry diversification and increasing education and training to enhance human resource competencies. Furthermore, Lahadalia stated that job opening contributes to national and regional income and provide job opportunities for future generations.