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STRATEGIC ASSESSMENT. Indonesia has secured at least $13 billion in investment pledges from Chinese companies following a meeting between Indonesian President Jokowi and President Xi Jinping in the Chinese city of Chengdu, Indonesian officials said on Friday. Jokowi arrived in Chengdu on Thursday and held a one-hour talk with Xi, followed by two and a half hours of dining.
Jokowi said he asked Xi to support the development of Nusantara, Indonesia’s planned new capital city in East Kalimantan province, and a major green industrial park in neighboring North Kalimantan province — both on the island of Borneo. Xi expressed support for the two major projects and “is willing to expand cooperation in areas including new energy vehicles and smart cities and jointly promote the industrial digital transformation.”
President Jokowi’s bilateral meeting with his Chinese counterpart Xi Jinping as well as both countries’ delegations in Chengdu, China, on Thursday, resulted in eight agreements, including cooperation in health sector, porang (Amorphophallus muelleri) flour export, tabasheer powder export, research and development for plant breeding and marine cultivation industries, development of Indonesia’s new capital city (IKN) Nusantara, “Two Countries, Twin Parks” cooperation, and Mandarin language education.
Indonesia’s economic growth is the second highest among G20 countries, Economic Affairs Coordinating Minister Airlangga Hartarto. “Indonesia’s economic growth stands at 5.03 percent, making it the second highest among the largest countries in the G20,” he said at the National Strategic Projects (PSN) Conference in Jakarta.
He also highlighted that Indonesia’s Purchasing Managers Index (PMI) is still at an expansive level of 52.7, which is a positive sign for the economy. Furthermore, to escape the middle-income trap by 2035, the community must take advantage of the demographic bonus that will last for the next 13 years, he added.
Indonesian Trade Minister Zulkifli Hasan (Zulhas) said the country’s digital economy has shown great potential to contribute to the national economy in the past five years. “The e-Conomy SEA Report 2022 notes Indonesia’s digital economy is predicted to reach $77 billion in 2022 and $130 billion in 2025,” Zulhas said at the Alibaba Cloud Data Management Summit held in Jakarta.
Zulhas said the government would continue to encourage the utilization of the digital economy. One of them is accelerating digital transformation in the trade sector in an inclusive and sustainable manner by supporting collaboration in four sectors, namely MSMEs, marketplaces, modern retail, and financing institutions.
Maritime Affairs and Investment Coordinating Minister Luhut Binsar Pandjaitan, at the Nickel Conference at the Kempinski Hotel in Jakarta opened about the sustainability of the nickel industry and electric vehicle (EV) batteries in Indonesia. Luhut expressed optimism because Indonesia has a competitive advantage in nickel, the raw material used in electric vehicle batteries.
Luhut also disclosed that all world commodity prices were falling except for nickel ore, because one of the reasons for the rising nickel prices was Indonesia’s decision to produce cobalt from nickel ore in Indonesia. According to him, the government’s ongoing downstream efforts have a direct impact on job creation in the country.
Indonesian Minister of Trade Zulkifli Hasan said the country’s digital economy has shown great potential to contribute to the national economy in the past five years. “The e-Conomy SEA Report 2022 notes Indonesia’s digital economy is predicted to reach US$77 billion in 2022 and US$130 billion in 2025,” Zulhas said at the Alibaba Cloud Data Management Summit.
Indonesia is standing with a group of countries opposed to a joint G20 commitment to triple renewable energy capacity by 2030, mainly because of concerns about financing and feasibility. The Indonesian delegates to the 14th G20 Clean Energy Ministerial Meetings in Bambolim, India, were Energy and Mineral Resources Minister Arifin Tasrif and ministry special staffer Yudo Dwinanda Priaadi. The latter confirmed to The Jakarta Post that Indonesia had rejected the 2030 proposal, saying that such a target could only be achieved if issues of accessibility, technology, and financing were resolved.
“When we are talking about such things, [they are related to financing]. That is important, so it becomes realistic, not just empty promises,” Yudo said. “If you back us up with the $100 billion you promised, we would welcome the plan to accelerate [the energy transition]. But if you’re only talking about targets without adequate financial resources, it’s not that we don’t agree, it’s just less [feasible],” he added.
To acquire Just Energy Transition Partnership (JETP) funds, Indonesia is required to ramp up its renewable energy-generating capacity to 34 percent of nationwide capacity, or to some 30 to 35 gigawatts (GW). That translates to as much as three to four GW of new capacity per year. However, from 2015 to 2022, the country only managed to increase it by two GW a year.
Investment Minister/Indonesian Coordinating Investment Board Chair Bahlil Lahadalia said that investment realization in Indonesia reached IDR 678.7 trillion in the first half of 2023, with IDR 354.9 trillion, or 52.3 percent, invested in areas outside Java Island. Singapore became Indonesia’s largest foreign investor from January to June this year, reaching $7.7 billion, followed by China ($3.8 billion), Hong Kong ($3.5 billion), and Japan ($2 billion). The United States became Indonesia’s fifth largest foreign investor by bringing in $1.6 billion during that period.
Based on regional distribution, West Java led the realization of investment with IDR 103.7 trillion, followed by Jakarta with IDR 79.5 trillion, East Java with IDR 61.2 trillion, Central Sulawesi with IDR 56.4 trillion and Banten with IDR 50.6 trillion.
According to the Poverty Profile in Indonesia in March 2023, released earlier this week by Statistics Indonesia (BPS), the percentage of poor people in Sulawesi and Maluku increased while the poverty rate fell in other regions, despite the fact that they are nickel processing centers with high economic growth.
Downstream mines, which have been heavily worked on over the last three years, have not been successful enough to improve the lives of local residents. Institute for Development of Economics and Finance (Indef) Centre of Trade Investment and Industry Chair Andry Satrio Nugroho said that the high poverty rate in nickel processing centers is due to the impact of downstream mining, which is less inclusive.
The Chief Secretary of Statistics Indonesia (BPS) Atqo Mardiyanto said the poverty rate in Indonesia in the March 2023 period has been reduced to 9.36% or equal to 25.9 million people. In March 2023, the number of people living in poverty decreased by 0.46 million compared to September 2022.
However, even if it decreases, the poverty rate and the number of people living in poverty is still higher in March 2023 compared to the pre-pandemic situation. Statistics Indonesia noted that the decrease in poverty rate is higher in urban areas, but the poverty rate shows better development in village areas compared to the pre-pandemic period.
Indonesia posted a $3.45 billion trade surplus in June as imports saw a double-digit decline, according to the Statistics Indonesia (BPS). “This makes it the 38th consecutive month that Indonesia booked a trade surplus since May 2020,” Atqo Mardiyanto, the chief secretary at BPS, told a media briefing.
BPS data shows the June numbers were a huge jump from the $430 million surplus in the previous month. Indonesia’s accumulated surplus throughout the first six months of 2023 amounted to $19.93 billion. This, however, marks a $5.06 billion or 20.24 percent decline from the $24.99 billion recorded over the same period last year.
Indonesian Immigration Director General Silmy Karim confirmed that the Golden Visa policy will be launched this month. The new visa will be applicable to foreign companies and foreign nationals who make investments of a certain amount. The program will be beneficial to Indonesia because the visa will be granted selectively, he said. Companies wishing to obtain the visa must put in a real investment of at least $50 million, while individuals are required to invest in government bonds at a minimum value of $350,000.
