Indonesia is an attractive country for foreign investment. Foreign direct investment in Indonesia that is aiming for competitive return of investment should be rewarded its objective well.
Indonesia has been opening to international investment since the mid-1980s, particularly since 1993 and immediately after the 1997-98 Asian financial crisis. Foreign investors have taken notice, although the upward trend in Foreign Direct Investment (FDI) inflows was temporarily reversed in the aftermath of the Asian crisis. Subsequent economic reforms, including a landmark Investment Law in 2007, have allowed FDI to recover to pre-1997 levels. As a demonstration of a new resilience to external shocks, FDI inflows have remain respectably high during the global economic crisis, while falling in absolute terms. Inflows in the first quarter of 2010 were at one of the highest levels achieved in the past decade.
FDI has historically contributed relatively little to fixed capital formation in Indonesia, but it has played a major role in raising employment and productivity and in generating exports. FDI has created nearly half the new jobs in recent years, and exports from foreign multinationals have accounted for an increasing share of Indonesia’s exports since 1990. FDI in Indonesia has also generated productivity spillovers to domestic industries. While the sources of FDI in Indonesia have become more diversified, much of the investment comes from only a few countries and is concentrated in Java and Sumatra, particularly in manufacturing.
Economic policy certainty is improving, but some implementing regulations are lagging. Public consultation is becoming more institutionalised and the appeals process strengthened. Red tape remains an obstacle to business, though procedures are being simplified. The government is striving to register land and property and to protect intellectual property rights. Despite recent judicial reforms, enterprises often prefer alternative dispute resolution mechanisms. The 2007 Investment Law gives standard protection to investors against expropriation and enshrines national treatment.
As a rich natural resources country and 4th most populated in the world, Indonesia is your foreign investment destination. High return of investment is most likely for your foreign direct investment in Indonesia.