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China’s Investment in Indonesia Surges

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China’s investment in Indonesia surges as President Joko Widodo’s five meetings with Xi Jinping begin to deliver results.

Indonesia Investment Coordinating Board revealed that this year accounted as much as $1.6 billion Chinese investments from January to September, which is an increase of around $600 million from 2016. During the nine-month period, investors from China assured $6.1 billion in Indonesia.

Relatively, China is now the third biggest investor in Indonesia, following Singapore and Japan. China also worked over United States this year, making itself the world’s second largest economy. The country also eyes transferring its excess manufacturing capacity offshore, which mirrors its Indonesia’s stronger ties.

Five years ago, Indonesia became China’s biggest trading partner. For Widodo, this is a sure win for his goal of building railways, roads, and ports may now be a reality.

The Board’s Deputy Chairman for Investment Supervision, Azhar Lubis, stated that the coming years will provide a prospective China realized investment. Lubis also claimed that this investment scheme would remain in the top five. The remaining issue is how to make the plans or interests into reality.

China's Investment in Indonesia Surges

Source: Bloomberg

Lubis explained that mineral smelters investment was China’s focus, which include steel, nickel, cement, bauxite, and automative industries. In nine months, Chinese FDI totaled to 1,205 projects.

U.S. FDI dropped from $2.4 billion in 2013 to $400 million. Singapore, on the other hand, accounts for $7.1 billion, which keeps it as the top investor in Indonesia.  The country’s investment in Indonesia increased from its 2015 record of $5.9 billion.

China's Investment in Indonesia Surges

Source: Bloomberg

PT Bank Central Asia Jakarta Chief Economist, David Sumual, stated that Indonesia needs investment from China for the country has excess capacity. Two countries need one another.

Indonesia’s Fisheries Minister Susi Pudijastuti claimed that despite the two countries’ previous South China Sea dispute, tensions with China are now manageable.

With President Rodrigo Duterte announcing U.S. ties ease after a meeting with China’s Prime Minister Xi, Philippines is also now seeking for more China investments. The state visit of Philippines President is expected to yield up to $24 billion in trade and investment agreements.

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