Indonesia is actively seeking to enhance investment from the Middle East, particularly through partnerships with the United Arab Emirates (UAE), as investment from the region remains comparatively low compared to East Asia.
Pradana Indraputra, a special advisor at the Investment Ministry, highlighted that, despite their substantial financial capacity, Middle Eastern investors have not significantly engaged in investment activities in Indonesia. Government data reveals that Middle Eastern countries did not feature among the top 30 sources of Indonesia’s foreign direct investment (FDI) in the first quarter of 2024. In contrast, East Asian economies such as China and Japan ranked among the top five, with notable investments.
While Japanese investment in Indonesia reached $976.5 million, Chinese investors injected approximately $1.9 billion into the country during the same period. Singapore, a neighbouring ASEAN member, emerged as Indonesia’s largest investor, with investments totaling around $4.2 billion. Comparatively, the UAE invested $4.1 million, and Saudi Arabia contributed $600,000 in FDI during Q1-2024.
Pradana expressed optimism that the UAE could lead the way in facilitating greater investment from the Middle East into Indonesia. Middle Eastern investors typically favour brownfield investments, preferring acquisitions or entering financial markets over greenfield projects.
Indonesia is offering incentives such as tax holidays and tax allowances to attract Middle Eastern investors. The country is banking on its comprehensive economic partnership agreement (CEPA) with the UAE to bolster bilateral investment figures.
The Dubai Chambers has initiated discussions and business talks in Jakarta, featuring companies from various sectors, including agriculture, construction, automotive, and technology. Emirati businesses are eyeing Indonesia due to its pivotal role in driving ASEAN’s economy.
In conclusion, Indonesia is actively working to attract Middle Eastern investment through strategic collaborations and incentives, aiming to diversify its investor base and foster economic growth.
