Even though 2024 is a political year in which Indonesia will hold a change of power after the February election, it seems that Indonesia Investment Coordinating Board is still confident in continuing to increase the country’s investment target.
Foreign Investment Dominate
In the midst of the unstable global economic and political conditions, Indonesia is still enjoying improving investment growth. It shows that the type of asset is not the only important thing that foreign investors look at, they also consider the specific regions.
According to a report from Indonesia’s Investment Coordinating Board (BKPM), investment realization in Indonesia throughout 2023 reached IDR1,418.9 trillion, a 17.5% increase compared to 2022. This achievement also absorbed around 1,8 million workers and exceeded the target set by President Jokowi.
Head of BKPM, Bahlil Lahadalia, said that investment realization in 2023 consisted of IDR744.0 trillion of foreign direct investment, or 52.4% of the total realization. Then, domestic direct investment was IDR674.9 trillion or 47.6%. From the business point of view, the largest investment realization in 2023 was in the basic metal industry worth IDR200.3 trillion.
Meanwhile, the real estate and office building sector pocketed IDR 77.1 trillion from domestic investment and IDR115.2 trillion from foreign investment. Five countries that invested the most in Indonesia are Singapore, China, Hong Kong, Japan, and Malaysia.
Ambitious Goals
Based on the realization that has continued to increase every year, the Indonesian government sets ambitious goals IDR1,650 trillion for investment targets in 2024 and Rp1,750 trillion for targets in 2025. In addition to the performance above, the recession in some countries such as Japan, Thailand, and England has also led economic observers to predict that Asian countries such as Indonesia and India will receive an influx of investment.
The government has prepared various policies and investment packages to achieve these ambitious goals. In addition to the controversial Omnibus Law to streamline the ease of doing business and licensing, there is also fiscal policy in the form of tax holidays, tax allowances and investment allowances for labor incentives.
In a significant move aimed at boosting investment, the government has allocated a record-breaking IDR422.7 trillion from the 2024 state budget for infrastructure development across Indonesia. This historic investment marks the highest infrastructure spending in the past five years, demonstrating the government’s commitment to create a strong foundation for future economic growth.
Investment Activity Report
Investment and government policies are always interrelated. Investors need supporting policies that trigger smooth business and operations. Meanwhile, a country needs investment to improve the economy and job opportunities. For that reason, it is mandatory for investors to submit an Investment Activity Report (LKPM or Laporan Kegiatan Penanaman Modal). It is to find out how well the policies are helping businesses grow. Yes, an investment report or LKPM is like a report card for the government’s policies.
Inside the LKPM, investors report on their business operations, including investment realization, workforce, production, partnerships, company obligations, and the problems they typically face. Investors are required to submit the LKPM on a quarterly basis, every 3 months. The schedule is as follows:
- 1st report: Due on April 10th
- 2nd report: Due on July 10th
- 3rd report: Due on October 10th
- 4th report: Due on January 10th of the following year
Failure to submit the LKPM on time or at all will result in penalties, ranging from written warnings to temporary business suspension to revocation of business license.
If you are an investor and want to avoid such penalties, Seven Stones Indonesia can help make the process easier. We understand that filing a report can be time-consuming and complicated. So reach out to our team today and let’s discuss how we can streamline your investment reporting experience.
