Quincy ThompsonAt a significant forum in Jakarta titled “Downstreaming and Industrialization: Key Strategy Towards Golden Indonesia 2045,” Bambang Brodjonegoro, Special Advisor to the President for Economic Affairs, highlighted Indonesia’s challenges in the race for investment compared to its Southeast Asian counterparts.
Bambang identified that Indonesia struggles with being perceived as having a high-cost economy, largely due to complex permitting, licensing, and investment administration processes. These factors have been major hurdles in attracting multinational investments.
A stark example of Indonesia’s challenges is the discrepancy in investment by Apple in the region. Since 2019, Apple has funneled US$15.8 billion into Vietnam, while in Indonesia, its commitment remains a modest US$100 million, with some funds still undisbursed.
In response to the recent ban on the iPhone 16 in Indonesia, Apple proposed a US$1 billion investment. Although promising, this investment remains unrealized, merely at the commitment stage.
When barriers arise, companies often redirect their investments to other Southeast Asian countries like Malaysia or Vietnam, where they encounter more streamlined processes. Malaysia, for example, attracts significant funds from tech giants such as Alphabet and Amazon due to its business-friendly environment.
Bambang stressed the urgency for Indonesia to reform its bureaucratic procedures and ensure legal certainty to enhance its investment appeal. Without such improvements, Indonesia risks missing out on pivotal opportunities as it aims to achieve its Golden Indonesia 2045 Vision.
Indonesia’s Investment Race: Can Reform Boost Its Appeal to Tech Giants?
Indonesia is facing notable challenges in attracting substantial foreign investments, especially when compared to its more competitive Southeast Asian neighbors like Vietnam and Malaysia. During the forum titled “Downstreaming and Industrialization: Key Strategy Towards Golden Indonesia 2045” in Jakarta, these issues were brought into sharp focus by Bambang Brodjonegoro, the Special Advisor to the President for Economic Affairs.
Investment Disparities in Southeast Asia
A glaring disparity exists in investment from tech companies like Apple. Since 2019, Apple has invested approximately US$15.8 billion in Vietnam. In stark contrast, its investment commitment in Indonesia is just US$100 million, and even these funds have not been fully disbursed. Recent incidents like the ban on the iPhone 16 underline these challenges, with Apple proposing a US$1 billion investment that has yet to be realized.
Challenges and Bureaucratic Barriers
Indonesia often struggles with being perceived as a high-cost economy due to its complex permitting and licensing procedures. These bureaucratic hurdles are significant deterrents for multinational corporations considering investment in the country. While Indonesia has ambitious goals for “Golden Indonesia 2045,” these bureaucratic inefficiencies pose serious challenges to achieving such aspirations.
Competitive Edge of Neighboring Countries
Other Southeast Asian nations, notably Malaysia and Vietnam, have successfully attracted significant investments due to their streamlined and business-friendly environments. Tech giants like Alphabet and Amazon have funneled considerable funds into Malaysia, capitalizing on its efficient investment processes and legal frameworks.
The Way Forward for Indonesia
To transform this investment landscape, Indonesia must urgently reform its bureaucratic procedures and create a more investor-friendly environment. Simplifying administrative processes and ensuring legal certainty are crucial steps to enhance the country’s appeal on the global investment stage. If Indonesia fails to undertake these reforms, it risks losing out on critical economic opportunities crucial for its Golden Indonesia 2045 vision.
For further information about economic developments in Indonesia or investment insights in Southeast Asia, visit the Indonesia Investments website.
