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Indonesia’s Investment Promotion in a Brief: A Case Study of Japanese FDI in Indonesia

Indonesia’s Investment Promotion in a Brief: A Case Study of Japanese FDI in Indonesia. Cahyo Purnomo Diskusi PPI 14 Juli 2007 TBIC Tsukuba. Definition and limitation.

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Indonesia’s Investment Promotion in a Brief: A Case Study of Japanese FDI in Indonesia

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  1. Indonesia’s Investment Promotion in a Brief: A Case Study of Japanese FDI in Indonesia Cahyo Purnomo Diskusi PPI 14 Juli 2007 TBIC Tsukuba

  2. Definition and limitation • Investment promotion: certain marketing activities through which governments try to attract foreign investors. Activities: advertising, direct mailing, investment seminars, investment missions and so on. • Investment climate: defined as the policy, institutional, and behavioral environment both present and expected that influence the returns and risks associated with investment. Three factors that can be included: macro fundamentals (macroeconomic stability, economic openness, social and political stability), governance and institutions (transparency, efficiency in regulation etc) and well-functioning financial sector, labor market and a skilled labor force) and infrastructure

  3. Background Intense competition among developed and developing countries Rapid growth of IPAs in 1990s In 2001: 164 IPAs around the world (UNCTAD) 1990s: 30 new IPAs were founded Indonesia’s investment climate has deteriorated since financial crisis mid 1997 Ethnic clash and sectarian violence Bomb blast in Jakarta and Bali Social and political instability

  4. What to do? • Indonesia’s Investment Year 2003-2005 • To restore investors’ trust/confidence • To better its image as a favorable investment destination • Presidential Instruction No. 3/2006 • Custom and excise law • Taxation law • Labor and investment law • New investment law was legalized end of March 2007

  5. Matrix of FDI performance and potential

  6. FDI to ASEAN 5 (US$ million)

  7. Japan’s Cumulative FDI to ASEAN 5 in mio US$ (1952-2004)

  8. Top Ten Approved Investing Countries 1967-2006

  9. Top 10 Countries of Japanese FDI Recipient, 1951-2004

  10. Divestment and relocations by Japanese electronics firms, 1999-2003

  11. Relocation of Japanese electronics sector, 1999-2003

  12. Conclusion • Focus on image building activity • Investment mission from Indonesia-Japan and vice versa • General investment seminar • Participating in investment exhibition • Led by top official • Don’t forget the existing investors • As counterpart/partner • Follow up

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