Post-Covid-19 Investment Opportunities in Indonesia

A diverse archipelago nation with immense investment opportunities due to its strategic location, large market and availability of raw materials, Indonesia definitely has its allure when it comes to attracting investors. However, it is not easy to navigate Indonesia’s infrastructure laws and political climate if investors are foreign businessmen. Despite this, Indonesia has been able to send the right signals to attract investors. 

 

The Indonesian government played its role in helping the country become more investment-friendly through introducing the Omnibus Law. The Omnibus Law seeks to streamline regulations over the economy and also to introduce flexibility in the country’s labour market. 

 

However, the pandemic brought about plenty of disruptions and volatility that has greatly affected the market and investors’ investment decisions. With increased volatility, comes increased risks. The negative emotions and pessimism encompassing the situation rendered investors cautious. 

 

As a result, there was a dip in domestic and foreign investors in Indonesia last year. Indonesia’s foreign direct investment, which accounted for 46.5% of total investment, fell by 7% to Rp 98 trillion in January to March 2020 from the fourth quarter of 2019. Indonesia also experienced a contraction in GDP growth for the first time in decades, showing a 5.32% contraction in Q2 2020. Overall, a stark downward trend was evident in stock markets. 

Reimagining the Economy

However, all hope is not lost – in fact, it never is. Putting the negative effects aside, we do see some good. Indonesia’s recession has been easing, and Q1 2021 has seen the steady recovery of the economy. In a bid to improve investment and strengthen the economy to support strategic policies in job creation, the government has also established the Indonesian Sovereign Wealth Fund. It was first introduced as part of the 2020 Omnibus Law and stands as an initiative that will help avoid many of the “pitfalls” that foreign investors have long faced when making independent investments in Indonesia. The measures put into place by the law would make this country a far more attractive destination for foreign businesses and investors alike. 

 

The pandemic has also spurred new, emerging opportunities for young entrepreneurs looking to diversify their portfolios. There are a couple of growth sectors to look at even in the midst of a sharp economic downturn.

 

1. Clean Energy

The transition towards clean energy remains as attractive as ever. Despite the global disruption caused by the pandemic, the transition to clean energy did not come to a complete halt. In fact, the pandemic led to greater focus on climate issues. 

2. E-commerce

The government sees potential in e-commerce to connect multi industries with local and international markets. Developing the digital economy can give micro, small, and medium-sized enterprises (MSMEs) the opportunity to enter the global value chain.

3. Medical

Medicine is a living science that prides itself on continual discovery. The healthcare system is at the centre of the COVID-19 pandemic, which has also proven the need for more investment to create greater resilience and better outcomes. The increased awareness and urgency the pandemic brought to the healthcare system, however, also offers the opportunity to reimagine and reform the sector for the future.

4. Infrastructure

Indonesia will continue to enhance its infrastructure development efforts post-covid. Infrastructure investment is bound to increase as the economy recovers from the pandemic.

Even so, foreign players and many local players find it challenging to operate in Indonesia due to:

  1. Complex market (the need for intense market research)
    Indonesia has been ranked as the most complex place to do business. From its changes in tax regulations to policies around wages and benefits, it highlights the need for intense market research prior to operating there. 
  2. Business culture
    The diverse and rich cultural dynamics dominate Indonesian business culture. There is a need to learn about Indonesian and the unwritten habits or unspoken rules of the country and its organisations.
  3. Tax orders and compliances 
    The Indonesian tax system is based on several primary laws that are routinely amended in order to accommodate the country’s ever-changing business environment.


Asia is not a monolithic entity and there are so many different business cultures, rules of engagement, systems to deal with – making it difficult to navigate for investors.

Bridging the Gap

Kimin Tanoto and Gunung Capital (GC) play a critical role in bridging the knowledge gap between potential investors and Indonesian businesses. As an entrepreneur who owns multiple businesses, Kimin Tanoto has had the experience of building businesses in Indonesia. Being multilingual, he is able to deal with regional and global partners efficiently and seamlessly. He also believes in conducting thorough market analysis and really understanding the influence makers, power structures and fundamental drivers of the economy. 

 

“Good and relentless execution is one of the most underrated skills,” Kimin shares. 

 

As he learned and mastered that, he aims to help other promising businesses in Indonesia do the same. Interested investors can surely leverage Kimin’s & GC’s local expertise to make strategic & value-driven investment decisions in Indonesia.