Economist Says Japanese Investment In Indonesia Is Better Than China: If We Flashback, China Is Out Of 10 Plans Maybe Only 3 Realized

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JAKARTA - Indonesia continues to aggressively attract investment from various countries, including Japan. Indonesia's relationship with Japan in terms of investment so far has never experienced a stagnant realization problem. In fact, 70 percent of the investment commitments were successfully realized.

As is known, the visit of President Joko Widodo (Jokowi) to Japan which was preceded by the Coordinating Minister for Economic Affairs Airlangga Hartarto to Japan resulted in a large investment commitment from Mitsubishi Motors Corporation worth Rp. 10 trillion from 2022 to 2025.

In addition, there is also a commitment from Toyota Motor Corporation (TMC) in the next five years (2022-2026) to increase investment of Rp. 27.1 trillion.

Economics expert from the University of Indonesia, Fithra Faisal Hastiadi, said the realization of Japan's investment commitments depended on the government's alertness in bureaucratic performance. Even so, he said, Japan's track record is quite good in terms of investment in Indonesia.

"Japan is on average if we talk about investment commitments out of 10 investment commitments, 70 percent of them are realized. So 7 out of 10. This means that so far, our relationship with Japan in the context of investment has not experienced stagnant realization problems," he said, in Jakarta, Friday, July 29.

According to Faisal, the realization problem actually occurs in investment from China. Faisal said that China's investment realization was only around 30 percent. Indonesia needs to make more efforts to realize the investment commitment from China.

"The problem is precisely with China. If we take a flashback to the past few years, out of 10 maybe only 3 have been realized. The PR is not with Japan. The PR is with China, how can then increase the percentage of investment realization, " he explained.

Therefore, according to Faisal, what Indonesia should do at this time is to increase the percentage of Japanese investment realization.

"Japan as a traditional partner of course also needs to get its commitment so that the realization is even higher," he said.

Homework

Meanwhile, Program Director of the Institute for Development of Economics and Finance (Indef) Esther Sri Astuti admitted that she still often hears complaints from investors about the difficulties in investing in Indonesia.

"They have complaints, regulations are still complicated, the government provides tax incentives, they still don't know how, the procedure claims, it's not clear, it's not clear," said Esther.

Esther said, some indicators from Ease Doing Business are still considered red in Indonesia, for example, the procedure for starting a business is still considered long and complicated, so more than 100 days, cross border trading has not made any progress.

Furthermore, Esther said, complicated regulations, unclear incentives, of course made investors reluctant to enter Indonesia. Especially in a crisis situation and there is a threat of a recession. Whereas Indonesia has great potential for business and investment.

"Indonesia has great potential, we can see it with the naked eye, large market, abundant natural resources, cheap labor, Singapore does not have it, China has but not all natural resources it has," he said.

Based on BKPM data, the realization of investment in Indonesia until the first semester of 2022 was IDR 584.6 trillion from President Jokowi's target of IDR 1,200 trillion. Foreign investment or Foreign Investment (PMA) is 53.1 percent of the total investment realization during the first semester of 2022. The value is IDR 310.4 trillion. Meanwhile, Domestic Investment (PMA) plays 46.9 percent of the total investment realization. The nominal is IDR 274.2 trillion.

During the visit of President Jokowi and his entourage to China, Japan and South Korea, the list of "souvenirs" or investment commitments brought by Jokowi from China, Japan and South Korea totaled Rp. 175 trillion.