Heru Andriyanto, Jakarta – The government will need an "out of the box" strategy that can significantly boost new investments after President Joko "Jokowi" Widodo set a target of Rp 1,200 trillion ($83.7 billion) in total investment, an increase by a third on the realization of last year, a minister said on Thursday.
While admitting that the target was extremely challenging amid the ongoing Covid-19 pandemic and global supply chain problems, Investment Minister Bahlil Lahadalia said it remains achievable.
"The Rp 1,200 trillion target is by no means a small figure. To put it in context, it's almost a half of our state budget," Bahlil said in a meeting with the Beritasatu Group editorial board in Jakarta.
Part of the investment strategy is to pay greater attention to more than 59 million micro, small, and medium enterprises that become the backbone of the national economy.
Bahlil said a vast majority of Indonesian MSMEs aren't registered as a formal business unit, making it hard to track their actual investment value.
"The president said we should not solely take care of huge investments, but we must also pay attention to those MSMEs," Bahlil said.
"We will 'formalize' them because they make up 60 percent of our GDP and account for 99.7 percent of the overall number of business entities in the country."
The investment strategy must be able to identify genuine investment with great potential for job creation, he added.
Bahlil said his office has canceled licenses of many "unfulfilled investment pledges" valued at Rp 558 trillion on paper only since 2019.
The ambitious 2022 investment figures were set after the government received Rp 900 trillion in domestic and foreign investment last year or 100 percent of the target.
Singapore remains the top investor by country and region with $9.4 billion investment or 30.2 percent of Indonesia's overall foreign direct investment last year, government figures show.
Hong Kong is ranked a distant second with $4.6 billion, surpassing mainland China which invested $3.2 billion.
The United States returned to the top four for the first time in many years with a total investment of $2.5 billion.
Japan meanwhile continues to slip to fifth with a $2.3 billion investment, from fourth place in 2020 and third in 2019 and second in the previous three years.
The overall domestic and foreign investment helped create 1.2 million new jobs in 2021.