JAKARTA. The Investment Coordinating Board (BKPM) has expressed optimism that Indonesia is still attractive for foreign investors, especially those from Japan. The statement was made after Indonesia decided to pick China over Japan to build the Jakarta-Bandung high-speed rail project worth US$5 billion.

BKPM head Franky Sibarani said on Friday that Japan’s interest in investing in Indonesia was still generally high. In the last nine months, principle permit applications from Japan were worth US$ 2.6 billion, an increase of 15.56 percent from US$ 2.25 billion in the same period last year.

“Based on the data, Japanese investment confidence in Indonesia is still high. Moreover, Japan's investment realization ratio in Indonesia’s various sectors is still quite high at around 62 percent. Thus, those principle permit applications submitted by Japanese investors seem to have materialized,” Franky asserted.

BKPM also identified US$14.24 billion of potential investment from Japan, $4.71 billion of which is considered highly likely to materialize.

For the last five years, Japan has consistently been in the top five countries for total investment in Indonesia. In the first half of 2015, Japan's realized investment was ranked third with US$1,577 billion, or 11.3 percent of the total realized foreign investment in Indonesia.

As previously reported, the government has decided to cooperate with China in Indonesia's first-ever high-speed rail project following its decision to change the project's cooperation scheme from government-to-government to business-to-business (B2B).

"Only China can offer the B2B scheme [between Chinese investors and a consortium of Indonesian state-owned enterprises]," said National Development Planning Minister Sofyan Djalil at his office on Wednesday as quoted by kompas.com.

Lamenting a missed opportunity to work with Japan, Indonesia's former ambassador to Japan Muhammad Lutfi said that Japanese investors showed high commitment on their investment and business plans. Furthermore, he added, Japanese investors were very good at business management and known as tough fighters in facing challenges and market dynamics.

One example of Japan’s realized investment in 2015 is the partnership between PT Krakatau Steel and Osaka Steel Co. Ltd. at the Krakatau Usaka Steel (KOS) factory. Located in Krakatau Industrial Estate Cilegon (KIEC) and finalized last May, the collaboration involves a US$220 billion investment.

By the time construction is finished, the KOS factory is planned to produce profile steel, steel bars, and steel plates that will be used on various infrastructure projects in Indonesia such as toll roads, ports, railways and housing.

Another good example of Japanese investment realization in Indonesia is the strengthening collaboration between Indonesia and Sumitomo Corporation through its subsidiaries such as Summit Auto Group (SAG), Sumitomo Mitsui Banking Corporation (SMBC) and Sinar Mas Multi Artha (SMMA). (nov/ags/bbn)

Editor: Sanny Cicilia