The infrastructure industry is one of the top business opportunities in Indonesia. The government of Indonesia has highlighted that approximately IDR 2,877 trillion (60% of total infrastructure funding needs) is required to fill the gap of total infrastructure funding needs.
Furthermore, to advance the quality of infrastructure services, private entity expected to contribute to sharing their knowledge and experience in the development, operation, and management of qualified infrastructure services. Moreover, the Government of Indonesia has committed to continuously improve and innovate in increasing investment attractiveness and to assure the involvement of the private sector.
GDP from agriculture in Indonesia averaged IDR 68,147 billion (USD 4.92 billion) from 2010 until 2018, achieving an all-time high of IDR 88,068 billion (USD 6.35 billion) in the first quarter of 2017. With the reported significant growth, however, this sector has yet to reach its full potential. As a result, under the administration of President Joko Widodo, progress has been made in recent years by implementing business-friendly initiatives to bring in foreign investments as well as domestic contributions.
The primary agricultural products in Indonesia are palm oil, rubber, cocoa, coffee, tea, cassava, rice, and tropical spices. This sector encompasses large plantations and smallholder productions, both private and state-owned. The focus of large plantations includes products and commodities for export such as palm oil and rubber, and the core products of smaller producers are rice, soybeans, corn, fruits, and vegetables.
With the presidential elections over, the new Administration is likely to push ahead with its plans to make Indonesia a manufacturing hub for Southeast Asia. This aims to raise the GDP contribution of the manufacturing sector from 20% to 25% by 2025, helping to increase Indonesia’s exports and address its current account deficit.
The Making Indonesia 4.0 Roadmap is central to this goal. It seeks to boost the industry’s competitiveness by incorporating major innovations such as artificial intelligence, robotics and sensor technology. The roadmap was launched in April 2018 and focuses on the capability upgrading of five manufacturing sectors, namely F&B, automotive, electronics, chemicals, and textile and garment.
In the infrastructure development, which is the priority program of President Joko Widodo, the government plans to develop 3 tourism areas that are included in the list of 10 National Tourism Strategic Area. The three priority tourism areas are Borobudur in Central Java, Lake Toba in North Sumatra, and Mandalika in West Nusa Tenggara. Other tourism areas are:
- The 10 New Bali
- Tanjung Kelayang
- Tanjung Lesung
- Agro-Edupark Togo Wening
- Panjang Island
- Sigandu Beach
- Boom Marina
According to a study conducted by McKinsey in 2018, almost 78% of Indonesian companies had awareness of the Industry 4.0 concept, only behind Vietnam (79%). Surprisingly, countries such as Singapore, Malaysia and Thailand have lower rates of Industry 4.0 awareness as compared to Indonesia.
With proper execution, by 2025, Industry 4.0 is estimated to contribute approximately US$121 billion to Indonesia’s GDP. The speed-up of the digital economy through Industry 4.0 may help Indonesia to earn up to US$150 billion annually by 2025 as well.
The development of the manufacturing sector with the digital platform becomes important as the latest technological advancements and the Industrial era is moving. The Government is targeting Indonesia to become the largest digital economy in ASEAN by 2020. Apart from the uneven infrastructure development, the digital economy industry in Indonesia grows significantly. This can be seen by the rapid growth of various start-up companies based applications. Currently, the Government provides opportunities for investors to participate in promoting the digital sector in Indonesia, where the digital industry sectors such as e-commerce, web portals, etc. become more open to foreign investment.
The government has opened investment opportunities in the film industry for foreign investors. With a population of 255 million, Indonesia is a promising business field for investors. However, cinemas viewer in Indonesia reached only approximately 10.5 million during the last 3 years (2013-2015) due to limited cinemas in each city/regencies. The government hopes this policy can encourage economic growth in the film industry in Indonesia.
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