Indonesia continues to attract investment with its manufacturing sector recording an increase to US$15.4 billion in the first half of 2022 from US$11.2 billion an estimated 40% up compared to the corresponding period of 2021, as conveyed by its Industry Minister Agus Gumiwang Kartasasmita.
The figure also accounted for 39.5 percent of the total investment value, which was recorded at US$39 billion in the first half of 2022.
“The manufacturing industry sector has an investment value of Rp167.1 trillion in the first semester of 2021 (which increased) to Rp230.8 trillion in the first half of 2022, or a double-digit increase of 38 percent,” Minister Kartasasmita noted.
The increased investment in the industrial sector will bode well for the economy as the sector has a profound impact on the national economy, in addition to increasing foreign exchange and employment, it also improves the manufacturing structure for Indonesian industries to become more competitive.
The Indonesian government under President Jokowi has been pro-business and pushing the country to be a more conducive state for business and investment climate.
Domestic demand is also improving with the expedition of booster vaccines within the community and industrial workers, appeasing investors who are looking for suitable venues to move their manufacturing from China.
According to data from the Investment Ministry, in January–June 2022, domestic investment in the industrial sector reached US$4 billion, accounting for 23.8 percent of the total PMDN of US$18.3 billion.
Meanwhile, foreign investment in the industrial sector reached US$11 billion, accounting for 53.4 percent or the largest chunk of the total FDI (foreign direct investment) of US$20.7 billion.
Indonesia is attracting investors who are currently targeting productive sectors, such as the manufacturing industry, compared to other sectors, this encourages the capital-intensive industrial sector for technology transfer and encourages the labor-intensive industrial sector in a bid to increase job vacancies.
During the first half of 2022, the manufacturing sector that recorded the highest domestic capital investment was the food industry, with a value of US$ 1.6 billion, up 8.8 percent on an annual basis.
The industries that drew the largest FDI were the base metal, metal goods, non-machinery, and equipment industries, which recorded an investment of US$5.7 billion, up 26.3 percent, and the chemical and pharmaceutical industry, which raked in US$1.8 billion in investment, or up 8.1 percent.
Cumulatively, for domestic capital investment and foreign domestic investment in the first semester of 2022, the most dominant investment in the manufacturing sector was the basic metal industry, metal goods, non-machinery, and equipment, valued at US$5.9 billion or an increase of 15 percent (yoy), followed by the food industry of US$2.8 billion or an increase of 7.2 percent.