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Indonesia remains open to foreign investors

Publication Date : 25-09-2012


Indonesia’s policy stance will remain open to foreign investors despite having some forms of protectionist measures to safeguard certain domestic sectors and small businesses, says the Singapore-based Indonesian Investment Promotion Centre (IIPC).

“There is enough room and sectors for investors to participate in our vast economy,” IIPC head Muhamad Harri Santoso said during a breakout session themed Indonesia: Investment Outlook and Performance at the CIMB Asean SME Forum 2012.

According to Santoso, sectors such as food production, pharmaceutical and agricultural sub-segments such as livestock and fisheries may appeal to investors seeking business opportunities.

McKinsey & Co currently ranks Indonesia as the 16th largest economy in the world, offering up to US$500 billion (1.53 trillion ringgit) worth of market opportunities for businesses in sectors ranging from consumer services, agriculture, fisheries, resources and education.

The international consultancy firm has projected Indonesia to be the seventh largest economy in the world by 2030, offering up to $1.8 trillion worth of market opportunities by then.

“We need support from other Asean countries to realise that (becoming one of the largest economies in the world),” Santoso said.

He added that Indonesia aimed to draw $30 billion worth of foreign direct investments this year, up from the $27 billion achieved last year.

Santoso said the Indonesian government was targeting to grow the country’s economy by 6.7 per cent this year, compared with a growth of 6.5 per cent in 2011.

He said the country would likely achieve its target gross domestic product (GDP) growth rate as the country had already achieved strong GDP growth rates in the first half of 2012.

In the first quarter of the year, Indonesia’s GDP growth stood at 6.3 per cent before accelerating to 6.4 per cent in the second quarter.

Santoso highlighted the fact that Indonesia was expected to remain the least vulnerable among Asian economies to economic weakness of the US and eurozone.

“That’s because our trade is not dependent on these traditional markets of Asia,” he explained.

Meanwhile, Hanim Hamzah, resident partner, Roosdiono & Partner, a member of ZICOlaw, advised investors who are looking to invest in Indonesia to understand the market and its legal framework well, and to plan not only their entry, but also their exit strategies, as well as to scrutinise whatever tender documents on their table.

She also advised potential investors to pay high attention to regulations and compliance, and to work towards obtaining the best and clearest terms to minimise potential for disputes in the later stage.


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