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Japanese investors eager to boost investment: BKPM
The country expects to see an increase in direct investment from Japan as its firms have shown interest in expanding their existing projects as well as starting new ones, a top official has said
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he country expects to see an increase in direct investment from Japan as its firms have shown interest in expanding their existing projects as well as starting new ones, a top official has said.
The interests were expressed by Japanese companies during the Investment Coordinating Board (BKPM)'s visit to Tokyo, Japan on July 28-30, according to BKPM head Franky Sibarani.
A Japanese company said at one of the meetings that it would invest US$8.1 million for the completion and expansion of its diaper factory in Indonesia, Franky said.
'The company currently sells imported baby diapers that it produces in Thailand, but the future plant in Indonesia will substitute the imports and fill domestic demand,' Franky said in a statement on Friday evening.
Franky said the company was in the finishing stages of the construction of its facility in West Java and expected the plant to start production in the first quarter of next year.
The firm was also planning a future expansion worth Rp 101 billion ($7.4 million) for the factory as it expected to make Indonesia its production base for baby diapers, he added.
According to Franky, the import substitution business planned by the company could help Indonesia save $9.3 million in foreign exchange annually, saying that 'the plan shows that investment coming into the country qualifies since it pushes exports and substitute imports.'
Azhar Lubis, BKPM deputy director for investment monitoring and implementation, added that the investment board would routinely monitor the progress of the project and facilitate the company's needs, especially related to permits.
BKPM data shows that Japan's realized direct investment in Indonesia had reached $19.72 trillion between January and June this year, an increase of 21.8 percent from Rp 16.19 trillion in the same period last year.
Three other Japanese companies that work on car component manufacturing had also shown interest in starting new projects and expanding existing ones in Indonesia, Franky said.
He said one of the companies that were currently running a factory in Indonesia had announced an expansion plan worth $72 million to increase production by up to 47 percent and employed 10,000 workers.
'Vehicle component manufacturing is one of BKPM's focuses in investment marketing abroad because it absorbs many workers, it is export-oriented and also reduces the import of spare parts for the local automotive industry,' Franky said.
The BKPM recently reported that PT Semarang Autocomp Manufacturing Indonesia, a Japanese-Indonesian joint venture vehicle component producer under Japan's Yazaki Corp., had expanded one of its plants in Java and helped increase exports by up to $123 million annually.
Despite growing interest, Franky said Japanese investors were concerned about obstacles to doing business in Indonesia, such as unclear local government formulas in calculating wages.
'We have explained the government's plan to finalize a regulation on the formula that can prevail for five years. We also support them in probing new factory locations in Central and East Java, where wages are not as high as in West Java,' Franky said.
Realized investment rose 16.6 percent to Rp 259.7 trillion year-on-year in the first six months of this year, with foreign direct investment accounting for Rp 174.2 trillion, or 67 percent of the total, BKPM data showed.
The BKPM aims for a total Rp 530 trillion in realized investment by the end of the year or 14.4 percent higher than last year.
