Investing in Indonesia: 2022 Mid-Year Summary for Foreign Companies

Investing in Indonesia – As we slowly recover from the effects of Covid-19, the world economy is starting to get back on its feet. In many countries around the world, investment has been kickstarted at a very high level. According to the report released by the Indonesian Ministry of Investment/BKPM, Indonesia has received a total of IDR 310,4 trillion in foreign investments from January through June of 2022. This represents a significant increase from the figures gained in the previous year which stood at IDR 228,5 trillion.  When the investments are broken down per sectors, the following are the figures:

  1. Base Metal Industry, Non-Machinery – USD 5,7 million (26,3%)
  2. Mining Industry – USD 2,4 million (11,2%)
  3. Water, Oil, and Gas Industry – USD 1,8 million (8,4%)
  4. Transportation, Warehouse, and Telecommunication – USD 1,8 million (8,1 %)
  5. Chemical & Pharmaceutical Industry – USD 1,8 million (8,1%)

There are two ways to interpret the list. You could see that it’s quite profitable for foreign companies to invest in the sectors listed above, seeing that they are putting in substantial amounts of funds and taking a large percentage of the total investments. On the other side, it is also viable for you to invest in other sectors not featured on the list, such as sports or creative industry. With fewer investors to compete with, it could be an interesting option for you to take a shot in these so-called out of the box options.

Common Pathways to Invest in Indonesia

It is important to note that there are two common pathways for foreign investors to invest in Indonesia. First, you can try and establish your company in Indonesia. This procedure typically requires a lot of funds and there are also strict and intricate procedures you need to follow. The second pathway is to identify pre-existing Indonesian companies operating in the same sector as yours, then invest your funds within that said company and join forces as business partners. This is seen as the simpler and easier way between the two, but the difficulty comes in the process of searching for the compatible local partner. Ideally, you need to find one that suits your company’s vision, goals, values, and culture.  

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How can Double M help?

Before investing in Indonesia. It is important to decide whether you want to establish your own company or join forces with others. Double M can help you either way. We can help you establish your company in Indonesia or help you find local partners which suits you.