There is a rising trend of investment from the European Union (EU) into Indonesia. This is no surprise considering the improving economy in Europe. Based on data from the Investment Coordinating Board (BKPM), the EU is now the fourth-biggest foreign investor in Indonesia, after Singapore, China and Japan.
Farah Ratnadewi, Deputy of the Investment Climate Department within the BKPM, says the EU contributed about 10 percent to total foreign direct investment (FDI) in Indonesia in full-year 2017. More importantly, EU investment into Indonesia rose by a strong 20 percent year-on-year (y/y) to USD $3.2 billion last year. Ratnadewi spoke at the BKPM-EuroCham Investment and Economic Outlook 2018 event in Jakarta on Thursday (08/02).
Leading EU investors in Indonesia come from the Netherlands and the United Kingdom. They account for 41 percent and 24 percent, respectively, of total direct EU investment in Indonesia. Ratnadewi added that it is a win-win situation: foreign direct investment opens employment opportunities for Indonesians, while foreign investors can benefit from Indonesia's big and expanding middle class consumers.
Ulf Backlund, Chairman of the European Chamber of Commerce Indonesia (EuroCham Indonesia), said that one of the priorities of those European companies that invest in Indonesia is to raise the skills of the Indonesian employees through the transfer of knowledge and technology.
Backlund added that he remains optimistic that the EU-Indonesia Comprehensive Economic Partnership Agreement (CEPA) can be agreed upon before Indonesia's legislative and presidential elections in 2019. This month the fourth round of CEPA negotiations between both sides will be held in Solo (Central Java). It is important to reach a final agreement before the elections in 2019 because a new government gives rise to concerns about policy stability (as the new government may not agree with the EU-Indonesia CEPA or may give priority to other trade deals).