The Ministry of National Development Planning (BAPPENAS) and Indonesia Investment Coordinating Board (BKPM), in collaboration with ARISE+ Indonesia, shared the results of an investment study into the electronics sector through a webinar on 20 October 2020. The webinar, entitled “Deep Dive Study on Investment in the Electronics Sector,” presented the study’s findings and recommendations to more than thirty representatives from government entities including the Ministry of Industry, the Ministry of Trade and the National Standardization Agency (BSN).
The study’s objective is to assess and prioritize subsectors and activities for Foreign Direct Investment (FDI) attraction in Indonesia’s electronics sector. Electronics manufacturing has been an important economic contributor to ASEAN’s largest market, Indonesia, with a 17% increase in its sectoral GDP over the five years to December 2019.* The sector has long been one of Indonesia’s key industrial assets and features as one of the five priority sectors within the government’s “Making Indonesia 4.0” roadmap.
“This study is important for our investment plan because based on the Sector Prioritization Study, electronics is one of the priority sectors that has benefits for Indonesia and is attractive to investors,”
said PN Laksmi Kusumawati, Director of Trade, Investment and International Economic Cooperation, BAPPENAS, in her opening speech.
FDI in the electronics sector contributes to economic growth, sustains and creates employment, supports knowledge and technology transfer and potential domestic linkages, and helps to increase exports. However, some challenges remain, including regulatory constraints and longer-term business enabling environment challenges relating to skills and investment-ready sites within the country.
The conclusion of this study is that Indonesia’s offerings for many of the electronics subsectors analyzed are either already strong or promising and demonstrate significant potential. Subsectors such as audio and video equipment (and their components), communications equipment, batteries and semiconductors emerged as being among the key subsectors that should be prioritized for proactive FDI attraction. At the same time, certain aspects of Indonesia’s offerings present challenges or need development and improvements in the months and years to come if the country is to achieve its FDI attraction potential in the increasingly competitive ASEAN and broader Asian markets. The GoI, led and coordinated by BAPPENAS and BKPM, should consider and discuss the set of short-term, medium-term and longer-term recommendations outlined in the study and ultimately decide which ones to prioritize.
The webinar gathered inputs and feedback from the participating government agencies and these are now being used to finalize the study’s report.
*BPS Statistics via Bank Indonesia: GDP by Industrial Origin at Current Prices:
https://www.bi.go.id/seki/tabel/TABEL7_1.pdf, quoted from the final draft of the report “Assessing and prioritising subsectors and activities for FDI attraction in Indonesia’s electronics sector – A Sector Deep-Dive for Investment.
You may access the webinar presentation materials through this link.
