40 Foreign Companies Seen Likely to Move Operations from China to Indonesia Due to Covid-19

JAKARTA, KOMPAS.com – Forty foreign companies are likely to move their operations to Indonesia from China, said Indonesia’s Head of Investment Coordinating Board (BKPM) Bahlil Lahadalia on Tuesday, June 23.

Bahlil said this is the relocation of China investment that is originating from the United States and Japan. BKPM has established a task force to directly negotiate with the relevant counterparts to bring the investment into the country.

The 40 companies engage in various sectors, including manufacturing and energy.

The BKPM head said amid the Covid-19 challenges that cause significant impact on businesses, those foreign companies had decided to move their operations from China. This is an opportunity not to be missed by BKPM and the government.

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However, BKPM is facing budget constraints as the initiative will require a budget of 120 billion rupiahs ($8.5 million). Thus, there is a need to allocate three billion rupiahs in each of the 40 companies.

“We are targeting to obtain the three billion rupiahs…not for each of the 40 companies only, but it could be for up to 300 companies,” said Bahlil during a meeting with House Commission VI overseeing trade, industry, investment, cooperatives, small medium enterprises, and state-owned enterprises on Tuesday, June 23.

Bahlil went on to say that the budget issue had hampered BKPM in approaching many foreign investors.

“No agreement was reached in previous negotiations with other countries as they seemed not keen on [further discussions]. Marketing intelligence needs to be carried out before the negotiations with other countries take place as we need to know their strengths and weaknesses. And what are we going to offer,” said Bahlil.

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To do so, he said that his office and the government will immediately prepare special incentives to lure foreign investors. 

Indonesia will build an industrial area in Madiun, East Java in addition to another location in West Java, he said.

BKPM data shows the realization of investment in the first quarter of 2020 stood at 210.7 trillion rupiahs, up eight percent year on year from 193.9 trillion in the same period of 2019. The foreign investment (PMA) from January to March 2020 reached 98 trillion rupiahs, dipping seven percent on an annual basis where from January to March 2019 recorded 107.9 trillion rupiahs.

(Reporter: Yusuf Imam Santoso | Editor: Tendi Mahadi, Yoga Sukmana )

Source: https://money.kompas.com/read/2020/06/23/165017426/ri-berpotensi-kedatangan-40-perusahaan-relokasi-dari-china?page=2.