Saudi Arabian Investment in Indonesia Remains Minimal

Last weekend, the Kingdom of Saudi Arabia was rocked by the arrest of 11 princes and four cabinet members by the Anti-Corruption Committee, led by Crown Prince Mohammed bin Salman. The arrests were made just hours after the committee's formation.

In addition to being the heir to the throne, Mohammed bin Salman is also instrumental in economic reform efforts to diversify Saudi Arabia's economy away from its dependence on oil by 2030, known as Vision 2030. The changes in government following the arrests of several ministers and princes, coupled with Saudi Arabia's new economic vision, can be leveraged by the Indonesian government to attract investment from the country. One example is securing funding for the construction of domestic oil refineries, which require substantial capital.

Saudi Arabian investment in Indonesia up to the first half of 2017 remained very small, less than US$1 billion. Data from the Indonesian Investment Coordinating Board (BKPM) shows that foreign investment from Saudi Arabia to Indonesia only reached US$700,000, or approximately Rp 9.5 trillion. This placed Saudi Arabia 54th as a source of foreign investment in Indonesia. One outcome of King Salman bin Abdulaziz's visit to Indonesia some time ago was a commitment from the Saudi Arabian government to invest US$1 billion, or approximately Rp 13.3 trillion, in Indonesia.