Post on 08-Jan-2017
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Indonesia's foreign investment outlook
Steps in the right directionIndonesia's government appears to be keen on opening up the country more to investment, but it will be a slow and challenging process.
Cold storageForeigners will be able own 100% of cold storage businesses across the country. Ownership is currently capped at either 33% or 67%, depending on the region.
E-commerceReversing course from a 2014 decision, the government is planning to open up the industry 100% to foreign investment provided the investment is worth more than 10bn rupiah.
PowerForeigners will be allowed 100% ownership of geothermal power plants of more than 10 megawatts, and ownership for smaller plants will be capped at 67%. Foreign investors currently are not allowed own a stake in smaller plants.
Sugar & rubber Foreigners will be allowed to own sugar and rubber manufacturing firms, as long as they are willing to source up to 30% of raw material from local farmers.
Planned revisions to Indonesia's negative investment list:
Security concerns inIndonesia may deter
the timing of investmentor perhaps even reduce
the likelihood of someprojects beginning.
AN UNCERTAIN FUTUREHopes for Indonesia's economic development have been dented by a slowdown in consumer spending and rupiah weakness, which has raised input costs for manufacturers.
201448.5AUGUST
46.4MARCH
© The Economist Intelligence Unit, 2016
52.7JUNE
& JULY
Nikkei Indonesia PMI, 2013-2015
That shrinking feelingIndonesia’s manufacturing sector has steadily contracted in 2015. The next few years for industrial Indonesia may be characterised by falling output.
2013 2015
A reading below 50 signifies contraction
IND
ON E S I A
INDUSTRIA
L
881.12020
776.52019
Passenger car registrations (units 1,000s)
Sponsored by Shell
After a lull, passenger vehicle registrations are expected to rev higher
The need for wheelsA rebound in consumer spending will likely spur production growth over the longer term.
Sources: BKPM, Herbert Smith Freehills, The Investment Coordinating Board of Indonesia, Markit, The Economist Intelligence Unit forecasts, Reuters, local news media.
330.62009
517.42012494.7
2011424.42010
Consumer spending (US$bn)
508.52014
501.72015
517.42013
593.62017
681.12018
529.42016
FDI targeting Indonesia's secondary sector
Lower gearForeign investment in Indonesia’s secondary sector has cooled since 2013.
Share of total FDI (%)
FDI (US$bn)
3US$bn
2010
21%
35%7
US$bn
12US$bn
16US$bn
13US$bn
2013
2012
2011
2014
2015*
48%
41%
46%
55%
9US$bn
AN UNCERTAIN FUTURE
880781601541359 737 810 875 926 978 1049880
* Data for 2015 is from January-September
Forecast2016 - 2020
IND
ON E S I A
INDUSTRIA
L