Jokowi brings in $11.9 billion in investment from Japan and South Korea
Jakarta. President Joko “Jokowi” Widodo returned on Friday from a week-long trip to three countries in Northwest Asia after securing or strengthening investment commitments worth $11.9 billion for the development of electric vehicles, basic materials and other industries in Indonesia.
Ten Japanese companies pledged a total of $5.2 billion in investments to be made over the next few years during a meeting between their leaders and Jokowi with his ministers at the Japan CEO Meeting 2022 in Tokyo on Wednesday.
During the meeting, Jokowi expressed his appreciation for Japanese investments in Southeast Asia’s largest economy.
“However, I also hope that Japanese investors will consider its competitiveness. So that they can compete with other investors in Indonesia,” the president said.
“In short, good quality, competitive prices, that’s what we expect. I think Indonesia is still one of the best places to invest.”
The Minister of Investment/Head of the Investment Coordination Board (BKPM), Bahlil Lahadalia, who was also present at the meeting, expressed his gratitude for the investment pledge.
“Thank goodness these companies have submitted their interests and are planning to expand their investment, approximately $5.2 billion or the equivalent of Rs 75 trillion,” Bahlil wrote on his Instagram account.
“We are providing a golden opportunity for Japanese investors to invest in Indonesia to improve supply chain resilience for Indonesian and Japanese people in the future,” he said.
Among the Japanese investments was the $1.8 billion pledge from car giant Toyota Motor Corporation to develop its electric vehicle industry in Indonesia over the next five years.
Rival Mitsubishi Motors Corporation has also passed on its $666 million plan to manufacture electric vehicles in the country to the government.
Sojitz, a sogo-sosha or Japanese vertically integrated trading company, was soon to engage in cooperation with state-owned fertilizer company Pupuk Indonesia.
Sojitz Corporation Chairman and CEO Masayoshi Fujimoto said the companies would produce methanol in West Papua, with a total investment of $1 billion.
“Currently, a feasibility study is underway, which is expected to be completed by the end of 2022,” Fujimoto said.
“We are grateful for the support of the Indonesian government so far, especially the Ministry of Investment, to accompany our investments in Indonesia.”
Mitsubishi Chemical Corp has pledged a $156 million capital injection into Indonesia’s polyester film industry, Bahlil said. Other investments included Denso Corp, which
relocated its operations from the United States in the four-wheel vehicle spare parts industry, Toyota Shusho in the management of the port of Patimban, Sharp in the air conditioning plants, Inpex in the oil and gas industry: and Kansai Electic Power in power stations.
South Korean investments
The president visited Seoul on Thursday and met with executives from ten major South Korean companies in Seoul. These companies have signaled their commitment to investing in basic materials such as steel and glass.
“Thank goodness these companies are planning to expand their investments in Indonesia and are on the verge of making an investment of $6.72 billion or the equivalent of Rs. 100.69 trillion,” Bahlil said.
On the sidelines of the meeting, Silmy Karim, chairman and CEO of state-controlled steelmaker Krakatau Steel, and Kim Hag-Dong, CEO of South Korea’s biggest steelmaker Posco, signed an agreement to expand their cooperation.
Under a deal worth $3.5 billion, the two companies would add capacity to their joint operation in Indonesia in anticipation of growing demand for steel for the electric vehicle industry and for Nusantara, the country’s new investment projects.
KC Glass & Materials has invested $350 million in its local branch KC Glass Indonesia, with the aim of making it the largest glass manufacturer in Southeast Asia. The company inaugurated the Batang Integrated Industrial Complex in Batang, Central Java on May 20, 2021, and seeks to employ 1,500 workers.
Japan and South Korea have been Indonesia’s main sources of foreign direct investment in recent years. Both countries consistently rank among the top ten investors every year.
In the first half of 2022, Japanese companies invested $1.75 billion in 2,821 projects across Indonesia. It was the fourth largest investment from a single country or special region after Singapore, China and Hong Kong.
South Korea came in seventh, with total investments of $896.7 million in 1,658 projects, according to the latest data from BKPM.