JAKARTA. Donald Trump’s protectionism is potentially to reduce foreign direct investment potentials to Indonesia, on the grounds that American companies will be under pressure of Trump’s administration to invest more in the US (the United States of America).
Under such circumstance, those companies will divert the investment back to the US. According to Head of The Investment Coordinating Board (BKPM) Thomas Lembong, some American investors have told him that they are likely to reduce their investments in this year.
However, Thomas is optimistic that the vacant positions would be replaced by investors from other countries. “In terms of fundamentals, developing countries have the highest economic growth,” Thomas said.
The solid fundamentals have caused Indonesia to remain attractive for Europe, Korea, the US, and China’s companies.
However, Indonesia should strive to make local investment climate to be more attractive, such as by simplifying licensing process. Furthermore, Indonesia has to attract investors from alternative countries, such as Japan, Korea, Europe, and China.
However, according to Thomas, it has to be admitted that the US’ investors have high investment qualities, mainly in terms of technology and consumer product. “They have high values in terms of brand, technology, and network. Therefore we still need (the investments from the US),” he said.
Thomas said that he will work extra-hard to attract American investors to invest in Indonesia, amid of pressure to divert the investment to their countries.
Should be alert
Minister of Finance Sri Mulyani admitted that the government is alert to the global phenomenon of invest declining. According to BKPM, the investment realization in Indonesia in 2016 grew by 12.4% (yoy) to Rp 612.8 trillion, while in 2015, the investment grew by 18% (yoy). The investment realization in 2017 is targeted to amount to Rp 678.8 trillion. (Muhammad Farid/Translator)
