Technical Assistance II
The Ministry of Investment (BKPM), in partnership with ARISE+ Indonesia, is currently gearing up to launch the Indonesia-EU Investment Attraction Plan in the first semester of 2024. The preliminary draft of this strategic Plan recently underwent a crucial consultation process, engaging key stakeholders such as BKPM, Bappenas, the Coordinating Ministry of Maritime Affairs and Investment, and the Ministry of Foreign Affairs. The latest meeting took place on December 8, 2023, at the BKPM office in Jakarta, serving as a significant forum for gathering valuable input from stakeholders.
Sri Endang Novitasari, Director of Investment Promotion for the Americas and Europe, shed light on the objectives of the Indonesia-EU Investment Attraction Plan. Ms Endang emphasised that the Plan's primary goal is to enhance the quantity and quality of foreign direct investment (FDI) from innovative European Union (EU) companies into Indonesia.
According to Ms Endang, in the past five years, BKPM has recorded a total of approximately USD 11.5 billion in FDI inflows from the EU, making it the fifth-largest source of FDI in Indonesia, contributing to 6% of the total FDI. Nevertheless, Ms Endang noted that there remains untapped potential, given the EU’s status as the world's third-largest economic powerhouse. She emphasised, "Clearly, the value is still below the EU's potential, which is why we are developing this Plan."
The Indonesia-EU Investment Attraction Plan is poised to serve as a comprehensive, action-oriented tool for identifying, engaging and ultimately attracting EU investors, covering traditional FDI targets (multinational enterprises and international small-and medium-sized enterprises), as well as newer sources of investment and financing solutions, including: asset managers, private equity and venture capital firms, pension funds, private banks and development finance institutions (DFIs). The priority segments fall under six core sector groupings: renewable energy, the electric vehicle (EV) ecosystem, healthcare & pharmaceuticals, electronics & ICT, transport & logistics and agribusiness & fisheries, as well as five cross-cutting thematic areas: digitalization, technology, the blue economy, the circular economy and downstreaming.
The initial draft of the Indonesia-EU Investment Attraction Plan was presented by Daniel Nicholls, an ARISE+ Indonesia Trade and Investment Expert. In his presentation, Mr Nicholls provided an overview of the Plan’s findings and structure, which comprises seven sections developed in stages.
The development of the Indonesia-EU Investment Attraction Plan began with a comprehensive ‘supply-side analysis’ of Indonesia's investment landscape, covering thematic and sector-specific assessments, looking at the competitiveness of Indonesia’s investment offerings in each key area.. This involved evaluating Indonesia's data and comparing it with ASEAN peers, as well as key G20 emerging market peers like Brazil and India. Additionally, in-depth one-on-one consultations were held with European businesses in Indonesia and ASEAN, along with consulting firms in Europe, to gather insights into present and future opportunities in the evolving business environment. The first part of this plan was completed at the end of 2022.
The next section of the Plan focuses on ‘demand-side analyses’, analysing European investments in specific sectors and sub-sectors, along with their source countries, regions and clusters in the EU member states. The section also assesses location determinants, seeking to understand the motivations driving European investors to expand overseas, particularly in the ASEAN region and across the various sectors. This analysis drew on multiple datasets, survey findings as well as the private sector consultations.
The detailed insights from these two sections have been used to establish a set of priority segments for Investment Attraction in each of the sector groupings.
The concluding and crucial section of the Plan document encompasses a comprehensive roster of potential investors whose lines of business are well-aligned with Indonesia’s investment offerings and opportunities. Additionally, it will include month-by-month implementation plan for Q2 2024 to Q4 2025, ensuring a robust and executable roadmap for the Plan's success. The groundwork for this phase commenced in late 2023 and is set to conclude in the first half of 2024, with active collaboration from BKPM and Bappenas. Valuable insights and strategic recommendations from a range of stakeholders continue to be encouraged, aiming to create a well-informed shortlist for each sector. This collaborative endeavour is designed to equip the ministry with a comprehensive toolkit, which includes not only contact details per shortlisted company, but also tailored outreach and engagement strategies and messaging for those shortlisted prospective investors.
As the Indonesia-EU Investment Attraction Plan nears completion, additional stakeholder groups, beyond the ministries, will be consulted, ensuring that the diligent efforts of all stakeholders involved will pave the way for a promising future of increased investment and collaboration. The Plan is poised to unlock a substantial and diverse set of investment opportunities and drive sustainable growth for both Indonesia and EU businesses, strengthening the economic ties between the two territories.
