Indonesia: Attractive playground for Chinese investors

Indonesia: Attractive playground for Chinese investors
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The sound development of China-Indonesia relationship, combined with the reform package to lure foreign investors in Jakarta, has made Indonesia an attractive playground for Chinese investors.


China-Indonesia relations have been on a fast track of development in recent years, with their strategic partnership continuing to be cemented.

The leaders of the two countries highly value their ties and have conducted frequent exchanges, effectively boosting bilateral relations.

Various cooperation mechanisms covering a wide range of areas including economy and trade, technology, defense affairs and marine techniques have also offered institutional backup for furthering ties between Beijing and Jakarta.

During a recent interview with Xinhua, Sri Adiningsih, a prominent economist with the leading Gajah Mada University, said Indonesia and China, two big economies sharing strong diplomatic ties, could explore more possibilities of cooperation in investment.

Bilateral collaboration is highly reciprocal, Adiningsih said. Indonesia needs foreign cash to build infrastructure to spur economic growth and sustain its annual growth rate of more than 6 percent.

That's because the stable economic increase could help Indonesia bring down its unemployment rate and slash poverty, she added.

Meanwhile, for Chinese investors looking to run factories in places with easy access to raw materials and natural resources, Indonesia is a choice, the expert said.

Indonesia, she said, with its relatively low labor costs and huge market, could serve as a gateway for foreign investors to enter the Southeast Asian market.

Being the world's top producer of palm oil and biggest exporter of refined tin and thermal coal, Indonesia has recorded annual economic growth of higher than 6 percent since 2010 after weathering the global financial crisis.


To speed up economic development and tackle regional disparity in the vast-archipelago country with 17,500 islands, the Indonesian government in 2011 launched a long-term development master plan which includes the development of six major economic corridors.

By 2014, the government expects to gather 638.3 trillion rupiah (about 69.5 billion U.S. dollars), out of a total 2,365 trillion rupiah (about 257.54 billion dollars) needed for the program, from investors.

Indonesia has political stability, sound macro-economic fundamentals, relatively high interest rates, an emerging middle class, growing social wealth and abundant natural resources. All these factors have made the country one of the most favorable investment destinations in the region.

President Susilo Bambang Yudhoyono has been hailed by foreign investors for the reforms he introduced to cultivate a business-friendly environment.

Thanks to these efforts, foreign direct investment in Indonesia hit a record of more than 18 billion dollars in 2011, and is expected to reach some 19 billion dollars this year.

Indonesia regained its investment grade status from Fitch's rating agency on Dec. 15, 2011, followed by a similar move by Moody's Investor Service, which put Indonesia on par with India and Brazil.

The second upgrade immediately brought down the country's 30-year bond yield and credit default swap for five years, leading to a stronger demand for its bonds.

by Mulyanda Djohan


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