What's the Appeal of Investing in Indonesia? Here's What Global Companies Say

A survey collected by the Ministry of Investment/Investment Coordinating Board (BKPM) shows that several factors underpin global companies' decisions to invest in Indonesia.

The largest factor is domestic market growth, chosen by 68.3% or 248 of the global companies surveyed. This is followed by proximity to markets or customers, at 30%.

The attractiveness of investing in Indonesia can also stem from its regulations, selected by 15.7%. Beyond these top three factors, the proportions are less than 5%.

In its presentation, BKPM stated that these factors can also be viewed not only from a market perspective but from a holistic economic-political-social viewpoint.

Among these are Indonesia's strong economic projections, at 5.1% in 2024 and 5.2% in 2025, according to OECD's "forecast." This surpasses China, which is projected at 4.7%.

Additionally, there is a large demographic, with 280 million people. "The middle class is growing rapidly, leading to increased demand in the consumer goods, health, and technology sectors," BKPM wrote.

Furthermore, the government's commitment to building infrastructure and improving regulations can foster an easier and more stable business environment.

Indonesia's natural resources are also abundant, evident in its status as a major producer of nickel, copper, coal, palm oil, gas, and rubber.

"Strategic position in the electric vehicle (EV) supply chain due to nickel and copper reserves," BKPM wrote.

Here are the details of the factors global companies consider for investing in Indonesia:

• Domestic market growth: 68.3%

• Proximity to markets or customers: 30%

• Regulatory environment: 15.7%

• Availability of skilled labor: 4.9%

• Natural resources: 4.1%

• Transportation infrastructure: 3.5%

• Lower costs: 2.7%

• Industrial clusters: 2.4%

• Quality of life: 2.2%

• Suppliers & joint venture (JV) partners: 1.9%

• Technology & innovation: 1.3%

• Taxes & incentives: 1.1%

• Government support: 0.8%

• ICT infrastructure: 0.5%

• Universities & research centers: 0.5%

• Location & property: 0.2%.