REPUBLIKA.CO.ID, JAKARTA -- The Investment Coordinating Board (BKPM) has suggested that Japanese companies invest outside Java to support the government's development targets and to intensify the growth of downstream and value-added industries.
"As the president has advised against Indonesia exporting raw materials, the incoming investments should be directed to the downstream industry," Head of the BKPM Franky Sibarani said in a press release here on Wednesday (25/3).
He added that investment in downstream industries have the potential to be developed outside Java because raw materials for the industries are mostly sent from there.
According to data from the BKPM, the value of foreign direct investment (FDI) by Japan in the 2010-2014 period amounted to US$12.01 billion, which is 96 percent of the total FDI in Java.
In 2013, Japan was the largest investing country in Indonesia, with investments worth US$4.7 billion, and a year later, its position dropped to the second, with investments valued at US$2.7 billion.
Currently, the Indonesian government is planning to build 15 industrial zones by 2019, of which 13 will be located outside Java.
For example, the Sei Mangkei Special Economic Zone (KEK) in North Sumatra will be developed as an industrial center for palm, rubber, fertilizer, and logistics, and also as a tourism area.
Sibarani further noted that the agro and maritime sectors were the two potential value-added industries of interest to Japanese investors.
"Some Japanese firms have committed to investing as much as US$260 million in the surfactant industry," he affirmed.
Surfactant is a processed product of crude palm oil, which could nearly triple the added value of the commodity. Surfactants are mainly used for detergents and soaps and in the cosmetics industry.
Moreover, Japanese investors have a good opinion of investment in Indonesia. A survey conducted by Japan Bank International Cooperation (JBIC) in 2014 placed Indonesia second in the ranks among the most promising countries for investors, after India.
In 2013, Indonesia was ranked first in this list of countries.
In addition, a survey conducted by Japan External Trade Organization (Jetro) revealed that two-thirds of Japanese investors in Indonesia had expanded their businesses.
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