Indonesia, with its vast economic potential and growing population, has long been a favorite destination for foreign investors. Among the many countries that have shown a keen interest in investing in Indonesia is Japan. Over the years, Japan has emerged as one of the largest foreign investors in the country, with its presence being felt across several sectors. In this article, we will take an in-depth look at the nature and scope of Japanese investments in Indonesia in 2017.
Overview of Japanese Investments in Indonesia
Japan has been investing in Indonesia since the 1960s. Over time, its investments have grown significantly, with the bulk of the investment being directed towards the manufacturing sector. Japan’s investments in Indonesia are primarily driven by its need to secure raw materials, labor, and markets for its finished products. At the same time, Japan also wants to tap into the potential of Indonesia’s growing consumer market.
According to data released by the Indonesia Investment Coordinating Board (BKPM), Japanese investments in Indonesia reached a total of US$4.9 billion in 2016, making it the second largest foreign investor in the country, after Singapore. In 2017, Japan’s investments in Indonesia are expected to continue to grow, driven by the country’s economic policies aimed at boosting growth and attracting foreign investment.
The Manufacturing Sector
As mentioned earlier, the manufacturing sector is the primary recipient of Japanese investments in Indonesia. Japanese companies have been investing heavily in the automotive, electronics, and chemical industries, among others. In 2017, Japanese companies such as Toyota, Honda, and Mitsubishi are expected to continue investing in the country, buoyed by the government’s efforts to improve the business climate and make it easier for foreign investors to set up shop.
The automotive sector, in particular, is expected to see significant growth. Indonesia is already the largest market for Japanese cars in Southeast Asia, and with the government’s plans to increase infrastructure spending and improve logistics, the demand for cars is expected to rise. Japanese companies are also looking to invest in the development of electric cars, in line with the government’s push for renewable energy.
Infrastructure Development
Another area where Japanese companies are expected to increase their investments is in infrastructure development. Japan has been a key player in helping Indonesia develop its infrastructure, with several high-profile projects already underway. In 2017, Japanese companies are expected to invest in the construction of toll roads, airports, and seaports, among others. The Indonesian government has earmarked infrastructure development as a key priority for the country, and with Japan’s expertise in this area, it is expected to play a vital role in helping the country achieve its goals.
Energy Sector
Japan is also showing a keen interest in investing in Indonesia’s energy sector. The country is already a major importer of Indonesian coal, and with Indonesia’s vast reserves of natural gas, Japan sees an opportunity to secure a reliable source of energy for its growing economy. In 2017, Japanese companies are expected to invest in the construction of new power plants and in the development of renewable energy sources, such as geothermal and solar power.
Conclusion
Overall, Japanese investments in Indonesia are expected to continue to grow in 2017. With the Indonesian government’s focus on improving the country’s business climate and attracting foreign investment, Japan sees a wealth of opportunities in Indonesia’s growing economy. While the manufacturing sector remains the primary recipient of Japanese investments, the country is also looking to expand its presence in other sectors, such as infrastructure and energy. With its expertise and financial muscle, Japan is well placed to play a key role in Indonesia’s development, and the prospects for the future look bright.
