Chinese investors hesitate over Indonesia investment

23 June 2017

Indonesia is currently looking for greater investment from Chinese companies. While Indonesia is a part of China’s Belt and Road initiative (which means financial and political support from Beijing), which would greatly further economic development and growth for both countries, Chinese companies are hesitant to invest. Their concerns include confusion about policy in Indonesia’s decentralised democracy, growing anti-China sentiment and major difficulties in acquiring permits and land. In order to reduce these concerns and improve investment, Chinese diplomats are urging the Indonesian government to provide more economic support for Chinese companies (such as improving public relations or providing tax incentives).

Infrastructure projects in Indonesia face many obstacles as they require multiple approvals from various governmental departments. The influx of Chinese businesses, workers and tourists into Indonesia has also increased the anti-China sentiment and ethnic tensions due to fears of China taking over the market.  In fact, Chinese investment is not as extensive as both governments want and not enough to warrant this fear. There are currently similar issues in the New Zealand market (Chinese influx and infrastructure needs) and if China and Indonesia can work together to reduce the existing issues, New Zealand can utilise their strategies to reduce infrastructure problems domestically. What is needed is for governments to work together and have more transparency when collaborating with and investing in each other’s markets.

Read the full article on the Financial Times website. If the link fails, put the title into Google search and click on the first article.

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