Investment in Indonesia

Investment in Indonesia

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The Indonesian textile industry is at s crossroad: The government needs to decide whether to allow it to shrivel, or whether to revitalise it by restructuring and reinvesting. There are various re-modernisation plans but these plans are awaiting the government's approval and financing. It is predicted that between $5 billion USD to $6 billion USD is required to update existing machinery and equipment.

Foreign direct investment is slowly increasing, and consumer confidence has also steadily increased. Although the latest Nikkei Manufacturing Purchasing Managers' Index for Indonesia showed that manufacturing activity contracted for the 16th successive month. This increase in investment should be further boosted by the anticipated half-billion-dollar investment from Decathlon, a French sporting goods and apparel retailer that sells several of its own brands and has more than 1,000 stores worldwide.

Siding with this more positive perspective, it is instructive to look to the Investment Coordinating Board (BKPM), which records investment plans, both foreign and domestic, in the textile sector. The BKPM reported a significant increase in investment plans throughout 2015, leading to a positive assessment as to how this might encourage labour-intensive investment in 2016 and 2017.

Investment plans, as recorded in the number of principle licenses obtained from the textile sector were up 68%. This investment figure in the textile sector seeded the employment of 101,000 workers. The realisation of these investment plans is expected to contribute positively toward the creation of the 2 million jobs targeted by the government in the near future.