Trade & Investment
From The Report: Indonesia 2017
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As South-east Asia’s largest economy and the world’s fourth-most-populated country, Indonesia is an important trade partner within ASEAN, as well as for Japan, China and the US. The country has averaged more than 5% annual GDP growth over the past decade through sound macroeconomic policies, rising domestic demand driven by a burgeoning middle class and high commodity prices. However, a gradual slowdown brought on by a collapse in commodity prices in 2011 and 2012 has weighed on the economy, highlighting the country’s commodity export dependency and pushing trade and investment to the top of the growth agenda.

This chapter contains interviews with Thomas Lembong, Chairman, Indonesia Investment Coordinating Board; Lim Hng Kiang, Singapore Minister of Industry and Trade; and Hugo Swire, UK Member of Parliament.

Articles from this Chapter

Overview

Changing trends: A series of economic stimulus packages is set to alter the investment landscape
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As South-east Asia’s largest economy and the world’s fourth-most-populated country, Indonesia is an important trade partner within ASEAN, as well as for Japan, China and the US. The country has averaged more than 5% annual GDP growth over the past decade through sound macroeconomic policies, rising domestic demand driven by a burgeoning middle class and high commodity prices. However, a gradual slowdown brought on by a collapse in commodity prices in 2011 and 2012 has weighed on the economy,…

Interview

Investment incentives: OBG talks to Thomas Lembong, Chairman, Indonesia Investment Coordinating Board (BKPM)
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Interview:Thomas Lembong How can investment processes be improved? THOMAS LEMBONG: Since September 2015, the government has issued 12 economic policy packages to improve the investment climate. I believe that there will be more policies issued to deregulate and modernise our regulations. At BKPM, we have implemented three key reforms to assist investors: the one-stop service office, the three-hour licensing provision and the direct construction facility. We will strengthen these services…

Interview

A healthy partnership: OBG talks to Lim Hng Kiang, Singapore Minister for Trade and Industry
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Interview:Lim Hng Kiang What measures can be taken to boost trade and investment between Singapore and Indonesia? LIM HNG KIANG: Singapore’s bilateral trade and investment ties with Indonesia are long-standing and strong. In 2015 Indonesia was Singapore’s fourth-largest trading partner and Singapore was Indonesia’s third-largest; bilateral trade reached S$58.7bn ($42.4bn). Singapore was also Indonesia’s top foreign investor. Singapore and Indonesia, nonetheless, recognise the potential…

Analysis

Balancing act: High-potential industries opened up to investment
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With decades of economic protectionism inhibiting investment, Indonesia moved to implement dramatic reforms in February 2016, with President Joko Widodo’s announcement of the 10th of 12 economic stimulus packages. The leader described the reforms as a “big bang” relaxation of restrictions on foreign investment, with the highlight being that 35 industries were removed from the government’s so-called negative investment list (DNI) – which outlines the sectors in which foreign investment is…

Interview

Taking advantage: OBG talks to Hugo Swire, UK Member of Parliament
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Interview:Hugo Swire How can the UK capitalise on the potential Indonesia holds to create more business opportunities for British companies? HUGO SWIRE: Understanding of the business opportunities available in Indonesia is growing. Major British companies have been aware for a long time, but small and medium-sized enterprises are also starting to pick up on this. To access these opportunities and succeed in Indonesia, UK companies need to invest time and resources in building strong relationships…

Analysis

Foreign exchange: The country weighs the pros and cons of several big trade deals
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Although Indonesia’s history has been marked by periods of protectionism and closed trade, the administration of President Joko Widodo has made major strides in liberalisation since coming to power in late 2014. This is especially apparent with the recent announcement that the country plans to join the Trans-Pacific Partnership (TPP), which will stand as the world’s largest free trade agreement (FTA) should it be ratified, bolstering Pacific Rim trade by billions, if not trillions, of dollars. The…

Analysis

Good neighbours: Ties with the world’s second-largest economy influence policy
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Indonesia is tailoring its exports and foreign direct investment (FDI) growth strategies towards enhancing its relationship with China, where authorities are hoping to transform the economy from an investment- to a consumption-based one. At the same time, falling commodity prices, particularly for coal and crude palm oil, have emphasised the importance of bilateral ties between the two nations. The government’s move to ban the export of raw minerals, meanwhile, creates significant opportunities…

Analysis

Advertising its strengths: Attracting investment at the heart of the government’s economic strategy
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The Indonesian government is in the midst of pursuing an ambitious new growth strategy, emphasising investment over domestic consumption as a primary growth driver in the wake of depressed commodity prices, lagging household consumption and lower-than-anticipated government revenues. The strategy has seen President Joko Widodo aggressively market new investment opportunities in Indonesia both regionally and further abroad, with a series of ongoing policy reforms, infrastructure investment and the…