Jokowi Opens Opportunities for Investors: Trends in German Investment in Indonesia Over the Last Decade

President Joko Widodo, also known as Jokowi, has opened opportunities for German investors to invest in Indonesia. He conveyed this during his visit to the Hannover Messe international industrial exhibition in Germany.

According to Jokowi, investment opportunities until 2060 reach US$1.5 trillion or more than Rp22.5 quadrillion. These investment opportunities consist of industrial downstreaming and green energy.

Jokowi estimates that the total investment needed for industrial downstreaming reaches US$545.3 billion or more than Rp8,000 trillion. This is in line with the national industrial downstreaming roadmap until 2040. Furthermore, there will be development of 21 commodities within that plan.

"Indonesia is not closing itself off; instead, we are very open to investment and cooperation in building downstream industries in Indonesia," Jokowi said, as quoted by *Katadata.co.id*, Monday (17/4/2023).

One of the commodities included in the downstreaming program is nickel. The government issued an export ban at the end of 2019, which took effect at the beginning of 2020.

At the beginning of this year, the Head of State announced the same thing regarding bauxite ore in mid-2023. According to Jokowi, the main goal of this downstreaming is the development of the electric vehicle (EV) industry.

"Indonesia is blessed with abundant natural resources, a demographic bonus, a large market, and a stable economy. We have significant capital, and we want to become a major player in the EV industry," Jokowi said.

The former Mayor of Solo stated that other investment opportunities exist in the new and renewable energy (NRE) sector. Jokowi estimates that the investment needed will reach US$1 trillion or approximately Rp1,500 trillion until 2060.

This investment is needed so that the government can stop all Coal-Fired Power Plants (PLTU) by 2050. PLTU uses coal as its main energy source. Jokowi stated that the target for NRE use as an energy source by 2025 is 23% of the total energy portfolio.

This investment will be used to finance the domestic energy transition so that the resulting NRE is affordable for the public. Therefore, Jokowi invited German investors to participate in building a green economy in Indonesia.

Aside from the investment opportunities for Germany in Indonesia, what is the trend of German investment in the country?

Based on a report from the Investment Coordinating Board (BKPM), the value of German investment in Indonesia throughout 2022 amounted to US$195.49 million.

The amount of German investment in Indonesia ranked 18th largest last year, below Canada, Taiwan, and Thailand.

Looking at the last few years, the trend of German investment in Indonesia has been fluctuating over the past decade. This can be seen in the graph above.

The highest value of German investment in Indonesia was in 2017, reaching US$288.98 million, while the lowest value was in 2014, at only US$50.16 million.

Throughout the period 2012-2022, there were a total of 4,184 German investment projects in Indonesia. Of this number, the most German investment projects entered in 2020, namely 1,008 projects.