Chinese Companies Continue to Eye Four Investment Sectors in Indonesia

Head of the Investment Coordinating Board (BKPM) Franky Sibarani had a meeting on Tuesday with China's Ministry of Commerce, Hangzhou city officials and five companies that are interested in investing in Indonesia.

Franky said at the meeting in Qingdao on Tuesday, the Chinese investors expressed an interest in four sectors in Indonesia. “Companies operating in the smelter, electronic appliances, infrastructure and the beverage industries were at the meeting,” said Franky in an official release on Wednesday (15/6). These four sectors, he added, receive a large portion of their investment from China.

Several Chinese companies have expanded their smelter businesses in the past few years, notably in 2015. They have been vigorously investing in the construction of smelters. Some smelter companies in Qingdao are now looking to invest in Indonesia. (Read: BKPM Chief Meets Hollywood Producer, Appeals to Foreign Investors).

BKPM records also show that many companies are interested in investing in Indonesia's electronic appliances and beverage sectors. These two sectors are categorized as labor intensive and consumer goods industries. Franky said Chinese companies have taken into consideration Indonesia’s competitive labor costs and huge market. However, the Indonesian government wants potential investors to develop good distribution networks.

Meanwhile, several large-scale Chinese companies are keen to invest in Indonesia's infrastructure sector. Some of these companies are state-owned enterprises (SOE) that have huge capital expenditure. Chinese companies that have already invested in infrastructure in Indonesia include those engaged in the transport, electricity and ports sectors.

“Yesterday, in Qingdao, I met with companies that finance infrastructure, contractors, iron and steel processing, and (companies operating in the) ports sector,” said Franky. (Read: BKPM: KLIK Program to Accelerate 16 Construction Projects in Industrial Zones)

China is one of Indonesia's main sources of investment with capital investment amounting to US$2.6 billion since 2010, mainly in the infrastructure, metal, machinery and electronics industries. According to BKPM records, in the past six years, China has committed to investing a total of US$52.3 billion in Indonesia.

Meanwhile, during the first quarter of 2016, China invested a total of US$464 million in 339 projects employing more than 10,000 workers. China is Indonesia's fourth largest investor after Singapore, Japan, and Hong Kong. (Read: BKPM: Ratings Agency Says Indonesia's Investment Climate Improved).