Investment Opportunities and Challenges in Indonesia


Investment opportunities in Indonesia are getting larger today. As revealed by Kontan.co.id, the investment climate in the country is still safe and in a positive trend. Notes from Bank Indonesia also show the money circulation in the foreign exchanges that received per July 25, 2019, reach IDR 192,5 billion.

Investment Opportunities in Indonesia

Looking at the growth of the investment climate, Indonesia should be able to make use of it wisely. This is because a well-managed investment opportunity created will be beneficial for the macroeconomy. In summary, investment opportunities in Indonesia are as follows.

Digital Era Offers a Big Opportunity

The development of technology has brought significant transformations in many fields. The changes also occur in the national economy that affects investment opportunities in Indonesia. Cited from Kumparan.com, Thomas Lembong, the BKPM Chairman, states that the investment opportunities in the technology industry provide direct impacts to the domestic investment This is because many investors, especially foreign investors, are seeking for labor-intensive and small-scale businesses (UMKM) that utilize digital technology. The life-style sectors such as e-commerce become the main point of this industry. It also occurs in several sectors that still become people’s favorite, including a sector that mainly associated with the needs of local communities.

Demographic Surplus

As a big developing country in Southeast Asia, Indonesia is blessed with a demographic surplus. Indeed, it will be a big issue if the demographic surplus can’t be well-manages, one of them is unemployment.

However, the labor-intensive and small-scale business, especially the ones utilize digital technology, can reduce the issues emerged. For instance, the e-commerce sector with a high level of valuation can create new job opportunities for the community.

The development of digital technology can also transform the informal sectors to more formal ones. Thomas Lembong has provided a clear example of it through online transportation services. For instance, Grab and Gojek draw Additional Valuation Tax (PPN) from their drivers that add income for the Directory General of Tax (DJP).

The demographic surplus that the economic sector will finally create a creative industry. Thus, there will be more people to invest in those sectors.

The Contribution of the Country’s Economy Climate

The investment opportunities in Indonesia are also influenced by the economic climate in the country with Southeast Asia as the main focus. For instance, the low growth of the economy and investment climate occurs in Vietnam that leads to economy saturation.

According to Thomas Lembong, there might be companies from China that have factories or distributors in Vietnam to move their businesses to Indonesia. If some of the companies invest in Indonesia, it will open a wider investment opportunity in macro sectors. However, it needs to be carefully handled and managed.

Proper Infrastructure

The first challenge comes from the infrastructure that plays an important role in today’s industry. The proper infrastructure will help to improve the productivity and quality of the products. In this way, there will be more infrastructure to contribute to providing a huge income for the country.

The internet infrastructure is a good example of it. This is because the people need of internet will be the main tool to fuel the small-scale industries and potential startups. In other words, a bad internet network would be one of the challenges in investment opportunities that should be solved.

Government Regulation

Aside from the infrastructure, government regulation also plays an important role in the investment climate of a country. As for Indonesia, government regulation has become a distinct challenge. It can be seen on the integrated online permission. This system is a solution provided by the government to improve investment. However, it hasn’t shown optimum results.

It is also often considered discriminatory, a factor that slows down the investment climate. In this way, the government tries to create the best regulation by paying attention to a few principles. It includes eliminating discriminations toward all investors and less focus on where the investors come from. However, this treatment should go in line with the law and pay attention to the national interest aspects of the country.

Another challenge of the investment climate is also influenced by the national security of the country. By knowing the opportunities and challenges faced by the investment climate in Indonesia, it is hoped that this page can give a new point of view for investors.