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Indonesia’s Investment Sector in the Hands of New President Prabowo Subianto

President Prabowo Subianto Leadership – Indonesia has embarked on a new chapter in its political journey as General (Ret.) Prabowo Subianto and Gibran Rakabuming were officially sworn in as President and Vice President of the Republic of Indonesia for the 2024-2029 term on Sunday, October 20, 2024. The new leadership has set ambitious goals, aiming to boost Indonesia’s economy with a targeted growth rate of up to 8%. Key to this plan will be driving investments across multiple sectors to reach this ambitious target.

The inauguration ceremony took place during the plenary session of the People’s Consultative Assembly (MPR), held at the MPR/DPR/DPD RI complex in Jakarta. The Prabowo-Gibran duo’s inauguration was solidified by the General Election Commission’s (KPU) Decree No. 504 of 2024, confirming their victory in the 2024 Presidential Election.

During the ceremony, MPR Chairman Ahmad Muzani officially opened the session, leading to Prabowo Subianto and Gibran Rakabuming Raka taking their oaths of office.

For years, Indonesia has been one of Southeast Asia’s largest emerging markets, with its political stability playing a crucial role in attracting foreign investments. With Prabowo now in charge, there are heightened expectations that his leadership will stabilize the country and boost investor confidence. Throughout his campaign, Prabowo consistently emphasized the need for equitable economic development, stressing the importance of fostering growth in the private sector alongside government initiatives.

Under the new leadership, Indonesia is expected to make significant strides in multiple areas, particularly in attracting investment. The country’s vision to become a high-income nation within the next few years is clearer now than ever before. How will president Prabowo Subianto achieve this ambitious vision?

President Prabowo Subianto to Welcome More Investments

Even before officially taking office, president Prabowo Subianto had already begun setting the stage for attracting investments. In a speech delivered to investors, bankers, and financial professionals at the Mandiri Investment Forum 2024 in Jakarta, Prabowo assured them that Indonesia is open to more investments and would actively work to create a better environment for investors.

“We are open to investments, and we want more of them. To do this, we must continue improving ourselves. Once again, we must enhance efficiency, curb corruption, enforce the rule of law, and ensure that all investors, both domestic and foreign, are protected under our laws,” Prabowo said.

Prabowo acknowledged that some inefficiencies in the system still exist and need addressing. He emphasized the role of technology in boosting government efficiency, stressing the importance of digitalization in improving oversight and accountability.

“Technology strengthens oversight. We will have better checks and balances, greater accountability, and eliminate time-wasting inefficiencies,” Prabowo stated.

In support of his vision, president Prabowo Subianto also raised Indonesia’s investment target for 2025. The Ministry of Investment or Investment Coordinating Board (BKPM) has set the investment target for 2025 at IDR 1,900 trillion, surpassing the 2024 target. Deputy Minister of Investment/Deputy Head of BKPM, Yuliot Tanjung, confirmed that this increased target aligns with Prabowo’s vision for his first year in office.

Industrial Downstreaming is a Priority for President Prabowo Subianto

Prabowo’s administration is determined to hit its increased investment targets, with the government focusing on value-added activities, particularly through industrial downstreaming. This approach has become one of the key priorities for Prabowo’s presidency.

Prabowo has pledged to continue the industrial downstreaming policies for various Indonesian commodities, emphasizing the importance of this initiative in improving the well-being of the people.

“To achieve genuine prosperity for all Indonesians, we must focus on downstreaming all the commodities we have,” Prabowo declared in his first official speech after his inauguration at the DPR/MPR complex on Sunday, October 20, 2024.

According to Prabowo, increasing the added value through downstreaming will strengthen Indonesia’s economy and lead to broader public welfare improvements.

To provide context, under President Joko Widodo’s administration, the Ministry of Investment/BKPM reported that investment realization between 2020 and September 2024 reached IDR 1,245.80 trillion, representing 22.18% of the total realized investments.

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Looking ahead, the Ministry of Investment plans to focus on refining raw materials domestically into finished products that can be utilized directly.

“For instance, we are prioritizing semiconductor chips because they drive key industries. This is what we will develop further, and we will also focus on energy and food security,” the ministry explained.

Free Nutritious Meal Program

In another significant move, the Ministry of Finance has allocated IDR 71.0 trillion for a free nutritious meal program set to launch in 2025. The initiative will target pregnant and breastfeeding women, toddlers, and students at all educational levels. This budget represents 0.29% of Indonesia’s projected GDP in 2025.

The program is expected to contribute 0.10% to the country’s economic growth that year. The National Nutrition Agency will receive a total budget of IDR 400 trillion to manage this initiative, with daily human resource expenditures projected at IDR 1.2 trillion.

“Of this, 75%, or around IDR 800 billion per day, will be allocated for nutritious meals,” said Dadan Hindayana, Head of the National Nutrition Agency, during the BNI Investor Daily Summit 2024 on October 8.

The program also aims to support local agriculture by sourcing ingredients from domestic farmers, aligning with the government’s dual goals of improving public nutrition and boosting the economy by utilizing locally produced goods. The substantial budget will be used to purchase agricultural products, circulating significant amounts of money within the community.

This free lunch initiative is part of Prabowo’s broader strategy to push Indonesia’s economic growth to 8%.

Challenges on the Horizon

Despite the optimistic outlook, Prabowo’s administration will face challenges. Global economic uncertainty continues to pose a threat to Indonesia’s growth. Rising global interest rates, geopolitical tensions, and the risk of a global recession may impact capital inflows into Indonesia. Prabowo must craft policies that are adaptable to shifting global conditions in order to maintain Indonesia’s appeal as an investment destination.

Moreover, businesses are eagerly awaiting clarity on regulatory and bureaucratic reforms under Prabowo’s leadership. The lack of clear and stable regulations remains one of the biggest obstacles to maintaining a healthy investment climate. Reforms in licensing, taxation, and labor policies are crucial areas that need to be addressed for Indonesia to remain competitive with its ASEAN neighbors.

Prabowo Subianto’s vision of creating an equitable economy and supporting private sector growth has sparked new hope for Indonesia’s investment and business sectors. His pro-business and stable leadership style is expected to draw more investors and enhance Indonesia’s competitiveness on the global stage. However, global economic challenges and domestic policy reform will remain key areas of focus.

To support this investment growth, companies like Bizindo are ready to assist foreign investors who wish to enter the Indonesian market. Bizindo offers a range of services, including investment permits, business licensing, and visa processing, making it easier for foreign businesses to establish and expand their operations in Indonesia. Contact us now!