China and South Korea are increasing their investments in Indonesia. According to Indonesia’s Investment Coordinating Board (BKPM), in terms of overseas direct investment (FDI) in 2020, China (data including Hong Kong) grew 11 percent over the previous year to $8.4 billion, and South Korea grew 64 percent to $1.8 billion. Japan, which had previously been pulling in investment, decreased by 40% to US$2.6 billion, a clear ebbing trend.
In terms of Indonesia’s overseas direct investment in 2020, Singapore ranked 1st at $9.8 billion, with China and Japan in 2nd and 3rd place respectively, followed by the European Union (EU) and South Korea. For Singapore, there are many instances of third countries making roundabout investments in Indonesia through the country, so most believe that China is actually in 1st place. 2020 October to December, South Korea overtook Japan for the first Time on a single quarterly basis in the same year.
Statistics from the Indonesian Investment Coordinating Board show that Japan held the No. 2 position behind Singapore from 2010 to 2016, but China overtook Japan in 2017. It is surprising that China and South Korea have increased their investments against the backdrop of Indonesia’s economic stagnation due to the expansion of the new crown Epidemic,” said a local resident of a Japanese company.
Indonesia International Motor Show (February 12, 2021, Jakarta)
South Korea is pushing forward its investment in Indonesia in the automotive sector, with Hyundai Motor planning to invest Rp19 trillion (about 8.8 billion yuan) to build a car plant in Bekasi regency, West Java.
One of the main focuses of future investment by Chinese and Korean companies will be pure electric vehicle (EV) batteries, which the Indonesian government aims to localize by 2024. The country plans to use its advantage of being the world’s largest producer of nickel, the main material, as a weapon to become a major production base for pure EV batteries, and is calling for foreign companies to start investment.
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