The food and beverage sector is still the main contributor in the realization of domestic investment. However, the decline in foreign investment should be a concern of the government.
Based on data from the Investment Coordinating Board, during the January-June 2019 period the realization of domestic investment in the food sector was ranked fourth of the entire sector with a value of IDR 21.26 trillion, while the Foreign Investment was ranked sixth with the value of realization US$ 706.7 million.
When compared to other manufacturing sectors, the realization of investment in the food industry for Domestic Investment is the highest. As for FDI, this sector only loses to the basic metal industry, non-machine metal goods, and equipment.
Chairman of the Indonesian Food and Beverage Entrepreneurs Association Adhi S. Lukman said businesses in this sector are still expanding, either by adding new production lines or opening new factories because Indonesia’s large population is a potential market.
“The Indonesian market is attractive, so there is a large investment interest,” he said, as quoted by Bisnis.com, Thursday (8/8/19).
Nevertheless, he said foreign investors were more careful in increasing their investment domestically. This can be seen from the value of realization of FDI in the food sector which has decreased since 3 years ago.
In 2016 the realization of FDI in the food sector was valued at US $ 2.11 billion, and then dropped to US $ 1.97 billion in 2017 and US $ 1.30 billion the following year. Meanwhile, Domestic Investment is still on an upward trend, which is valued at IDR 32.02 trillion in 2016, then IDR 38.54 trillion in 2017, and IDR 39.09 trillion last year.
With the decrease in FDI, Adhi assessed that the investment climate in Indonesia needs improvement. According to him, there is a large interest in foreign investment to enter Indonesia, but these companies sometimes doubt if there are regulations that are considered less conducive.
“For example, about labor and the availability of raw materials, they are very concerned. Although there are no sanctions, multinational companies must comply with the rules and this becomes an obstacle,” he said. (bas/mrs)
Writer: Baskoro Dien
Translator: Muhammad Rizal Saanun