World Economy

Indonesia Hopes to Woo UK Firms

Indonesia Hopes to Woo UK FirmsIndonesia Hopes to Woo UK Firms

The government is looking to persuade more British companies to enter Indonesia’s manufacturing sector, such as the machinery, pharmaceutical and oil refinery industries.

Azhar Lubis, the deputy director for investment monitoring and implementation at the Investment Coordinating Board, said that the UK’s total foreign direct investment totaled $424.9 million in the first half of this year, making the country the seventh-largest investor in Indonesia.

However, Azhar said, investment from British companies still had potential to grow, Yahoo reported.

“That figure can still be improved. We have a representative office in London, the Indonesia Investment Promotion Center, to net investment from the UK and other European countries,” he told The Jakarta Post.

The sectors best suited to British investment include, according to Azhar, machinery, pharmaceuticals and oil refineries, in line with the government’s goal to focus foreign investment on upstream and pioneer industries.

BKPM head Franky Sibarani, currently attending the Expo Milano 2015 in Milan, Italy, said that he planned to hold a business forum and an exclusive meeting with potential British investors in London in the next few days.

“The UK is among the largest investors in Indonesia, with total investment of $4.29 billion in the period of 2010 to 2014, making it the eighth-largest investor during the period,” he said in a statement on Monday.

Franky added that the BKPM also aimed to turn Indonesia into one of the top investment destinations for British investors.

Citing a report from the Financial Times, Franky said that Indonesia was currently the 55th-most-desired investment destination among British investors.

UK Trade and Investment Minister Lord Francis Maude said during a visit to Jakarta in July—accompanying Prime Minister David Cameron—that Indonesia needed to keep improving its investment climate to attract more British investment.

The government recently issued a new policy extending a tax holiday up to 20 years and including more business sectors within it.

The new regulation also expands the range of sectors wherein the tax breaks apply from six to nine. Under the old rules, the tax-holiday facility was available for firms in six pioneer sectors—base metals, oil refineries, basic petrochemicals, machinery, renewable energy and telecommunications equipment—while the new rules have added to this list marine transportation, processing industries in special economic zones and joint public/private economic infrastructure.

Indonesia expects total domestic and foreign direct investment to increase by 115% for the period of 2015 to 2019, from the target of the previous five years.