US Firms Plan to Invest $400m Here, Gita Says
Accelerating economic growth and political stability are the reasons more multinational companies are investing and expanding their investment in Indonesia, a government official has said.
Trade Minister Gita Wirjawan said on Thursday that three major US companies — Marvell Technology Group, Procter & Gamble and Mars Incorporated — had pledged a combined investment of $300 million to $400 million here.
“[Marvell] wants to invest in software [development] in Indonesia,” he said. “[The factory] will be built in Bandung or somewhere else, I don’t really know. If they are convinced that intellectual property rights in Indonesia are protected, indeed, they will take a proactive move.”
Regarding candy maker Mars, Gita said the company, through its Indonesian unit, already had a chocolate factory in South Sulawesi, and “it will build more.”
Mars’s Indonesian unit is called Mars Indonesia.
US consumer goods maker Procter & Gamble has plans to invest $150 million more here, the minister said, without providing details.
Apart from those three, Gita said US heavy-equipment maker Caterpillar had shown interest in investing $800 million.
“It will invest $800 million,” he said. “Next year, they will start [to build a factory] in Batam that produces bulldozers, etc.”
Caterpillar, along with Posco and Kuwait Petroleum, is entitled to a tax holiday.
Unilever Indonesia, a consumers goods maker that produces shampoos and detergents, said late in September that it planned to invest 90 million euros ($122 million) to expand its Surabaya plant, which produces skin-care products and food.
It also plans to invest Rp 1.1 trillion ($125 million) to build a factory that produces a fatty acid derivative, oleochemical, in North Sumatra. Oleochemical is essential in making liquid cleansing products such as shampoo.
Even as the government welcomes more overseas companies in Indonesia, Gita said the country was still not prepared for a region-wide free trade agreement. The Asean Free Trade Area is scheduled to come into effect in 2015.
“In free trade agreement, Indonesia is on the weak side,” said Gita, a former investment banker at JPMorgan Chase in Indonesia.
Investment from the three US companies should keep Indonesia on track for achieving its foreign investment targets next year, Gita said last week.
He said that realized investment growth was expected to remain steady at 15 percent in 2012 despite concerns that the euro zone debt crisis will disrupt capital inflow to the region.
Total investment — including foreign and domestic direct investment — is expected to reach $26.5 billion next year, said Gita, who is also heads the Investment Coordinating Board (BKPM). For 2011, it has predicted investment will grow 15 percent to $23 billion.
The government forecasts the economy to expand 6.5 percent this year after growing 6.1 percent in 2010.
I didn’t get the chance to post this up yesterday, nevertheless here we go. Seems like many has already jumped or planning to jump in the bandwagon now. How about you? Do you see Indonesia as your investment target? Why and why not? Share your thoughts with us!