Overview

Investment realization in Indonesia in the second quarter of 2024 reached IDR 428.4 trillion (USD 27.2 billion) – consisting of 50.7% FDI and 49.3% DDI, growing 22.5% compared to the same period in 2023. Based on data from the Ministry of Investment/BKPM, record still showed almost equal percentage of investments entering Java (49.8%) and non-Java islands (50.2%). Labour creation reached 677,623 workers in the second quarter.

FDI data recorded the first top three investments were in the Basic Metal industry, USD 4.4 billion (30.3%); Other Services, USD 1 billion (7.0%); and Mining, USD 0.9 billion (6.2%).

DDI recorded Mining, IDR 32.1 trillion (15.2%); Transportation, Warehouse and Telecommunication, IDR 29.6 trillion (14%); and Housing, Industrial Park and Offices, IDR 21.4 trillion (10.2%) as its top three.

Top 5 Investment Locations:

1. West Java at IDR 7 trillion (USD 4 billion)
2. DKI Jakarta with IDR 62.0 trillion (USD 9 billion)
3. East Java with IDR 6 trillion (USD 2.26 billion)
4. Banten with IDR 0 trillion (USD 2.09 billion)
5. Central Sulawesi with IDR 8 trillion (USD 2.08 billion)

Top 5 Countries:

1. Singapore, USD 6 billion
2. China, USD 0 billion
3. Hong Kong, USD 9 billion
4. South Korea, USD 3 billion
5. United States, USD 9 billion

Investment in Downstream Sector in Q2/2024:

1. Mineral-Smelter amounted to IDR 9 trillion (USD 4.5 billion)
2. Agriculture-CPO amounting to IDR 5 trillion (USD 794.2 million)
3. Forestry-Pulp and Paper amounting to IDR 2 trillion (USD 711.6 million)
4. Oil and Gas-Petrochemicals amounting to IDR 8 trillion (USD 368.5 million)
5. Electric Vehicle Batteries Ecosystem amounting to IDR 2 trillion (USD 330.4 million)

Latest Update 

• KITB’s Inauguration
  • Batang Integrated Industrial Estate (KITB), an Industrial Park that was said to be built without a masterplan in its initial construction, was finally inaugurated by President Joko Widodo on Friday, July 26, 2024.
  • Bahlil Lahadalia, Minister of Investment, noted that at least 18 companies have entered KITB, with a total investment value more than IDR 14 billion, and approximately 19,000 workers have been employed to the community.
  • Out of the 18 companies, 14 companies are located in the Phase 1 cluster, a 450 Ha of land, with a total realized investment value of IDR 6.8 trillion and an estimated workforce absorption of 14,880 people.
  • On this occasion, for the first time, gas was also supplied to the glass factory of PT KCC Glass Indonesia on August 1, 2024, with a potential distribution of up to 8 billion British thermal units per day (BBTUD), through the National Strategic Project Cirebon- Semarang (Cisem) Gas Pipeline Phase 1 Semarang-Batang Section, a total of 62 kilometres distance.
  • Based on data from Pertamina’s Gas Subholding PT PGN Tbk, with the integration of this energy infrastructure, gas absorption in Central Java has increased to 60-70 billion British thermal units per day (BBTUD), from 48 BBTUD previously.
  • Bahlil mentioned a possibility of South Korea LG to build a cathode factory in KITB as an electric vehicle battery ecosystem as the feasibility study completed in August.

• Sembcorp Sets Eyes on Tanjung Sauh
  • Singapore Sembcorp Industries plans to develop two new low-carbon Industrial Park in Batam, in partnership with developer Panbil The two companies have signed a Memorandum of Understanding on August 1, 2024, whereas Sembcorp will invest through its subsidiary, Sembcorp Development.
  • The first project located in Tembesi, a 100 Ha of land which will accommodate various industrial sectors, ranging from electronics, electricity, precision engineering and
  • The next project is a 500 Ha land in Tanjung Sauh, one of the small islands in Batam that has been designated as an SEZ for The SEZ is managed by Panbil Group. The project aims to serve light to medium industries, as well as energy-intensive businesses such as advanced manufacturing customers and data centers, with provision of energy and sustainable circular solutions.
  • The investment value on Tanjung Sauh SEZ is estimated to reach IDR 190 trillion (USD 12 billion) over 20 IDR 30-35 trillion (USD1.9 billion) comes from the developer, and the rest will come from investors. On the shorter term of 5-year period, the developer is investing IDR 5-10 trillion (USD 300-600 million) for reservoirs, ports, basic infrastructure such as WWTP, roads and others.

• Nippon Shokubai Expands SAP Plant in Indonesia
  • Nippon Shokubai Co., Ltd., a leading chemical company headquartered in Osaka, Japan, has announced a significant expansion plan for its Indonesian subsidiary, PT. Nippon Shokubai Indonesia (NSI) of constructing a new superabsorbent polymer (SAP) plant with a production capacity of 50,000 metric tons per year.
  • The board of Nippon Shokubai approved this investment plan during a meeting on July 30, The decision comes in response to the growing global demand for SAP, which is a crucial material for manufacturing diapers, especially in regions with rapidly increasing populations.
  • Nippon Shokubai has already expanded its acrylic acid (AA) production facility by 100,000 t/y, bringing the total AA capacity to 240,000 t/y. This vertical integration from AA to SAP aims to meet the strong demand growth in the Asian region and create synergistic effects with the existing plant.
  • Additionally, the company is considering optimizing its global SAP supply network by potentially discontinuing some of the older, less productive SAP production facilities in Himeji, Japan. The new SAP plant will add to NSI’s current capacity of 90,000 t/y, resulting in a total capacity of 140,000 t/y once completed.
  • The construction is scheduled for mechanical completion by January 2027, with commercial operations expected to commence in July 2027. This project will be located at the existing NSI plant site in Cilegon, Banten, with an investment amount of approximately US$ 110 million.

• Inauguration of Lithium Battery Anode Factory in Kendal SEZ
  • Indonesia’s President Joko Widodo on August 7,2024 inaugurated a plant built by China’s BTR New Material Group and Singapore’s Stellar Investment that will produce anode materials for EV batteries in Kendal SEZ.
  • In the first phase, the companies invested USD 478 million in the The facility can produce 80,000 tons of anode materials meant for lithium-ion batteries every year, enough to support the production of 1.5 million EVs. It took only 10 months for BTR to complete the Kendal facility.
  • BTR is expected to start construction of the second phase of the anode material plant in the fourth quarter this year to double capacity to 160,000 tons annually.
  • An additional USD 299 million will be invested to build the second phase, which will put Indonesia among major global producers of anode upon its completion.

• Potential Oil & Gas Company from China
  • At least two oil and gas companies from China have confirmed that they will conduct joint studies in Eastern Indonesia. The two companies will focus on exploring areas that have not been optimized for oil and gas utilization.
  • Sinopec Group and Petrochina are claimed to be the ones conducting a joint study in Buton and Timor areas that have been designated as joint study areas since last After completing the joint study, the companies will conduct direct bidding for oil and gas working areas, determining the winner, and developing the area.
  • According to data from the Special Task Force for Upstream Oil and Gas Business Activities (SKK Migas), Indonesia has 128 basins. Of these, only 20 basins that are already in production.
  • 8 other basins have been drilled, but are not yet producing. There are also 19 basins that are indicated to hold hydrocarbon reserves; 13 basins that have been drilled, but no reserves have been found; and 68 basins that have not been The 68 basins that have never been drilled are mostly in the eastern part of Indonesia
  • The arrival of investors from China is believed sill stimulate the national upstream oil and gas industry. Director General of Oil and Gas Dadan Kusdiana said that currently there are various great opportunities to increase oil production, with a total initial potential of more than 1 billion barrels of oil.

• Kayan LNG Requests Increased Gas Feed
  • PT Kayan LNG Nusantara (Kayan LNG), which operates a mini LNG plant in Simenggaris, North Kalimantan Province, has requested an increase in gas feed to meet the needs of domestic and export market off-takers. Currently, the LNG supply to the plant is at 14-15.5 million standard cubic feet per day (MMSCFD), which falls short of the contracted volume of 22 MMSCFD agreed upon with upstream companies Pertamina Hulu Energi Simenggaris and Medco E&P Simenggaris. These companies, through their joint venture JOB Simenggaris, operate the Simenggaris gas
  • Kayan LNG has secured sufficient buyers both domestically and internationally to absorb the full 22 MMSCFD of gas starting August However, JOB Simenggaris is still working to ramp up gas production to meet this demand, limiting Kayan LNG’s operations to a maximum of 15.5 MMSCFD. Kayan LNG is fully capable of operating at its maximum capacity of 28.6 MMSCFD. The current situation has put Kayan LNG in a challenging position, where LNG buyers’ demand exceeds the available gas supply, impacting its operational efficiency and market commitments.

• Challenges in New & Renewable Energy Development
  • The addition of 73 megawatts of new renewable energy-based power generation capacity by June 2024 is not good enough to optimize clean energy in the country, although this figure is already 66.6% of the target set for this year of 326.91 megawatts.
  • Various recurring problems still overshadow efforts to increase the share of Renewable Energy in the national energy In the end, the government of Indonesia must again cut the target of Renewable Energy in the national energy mix next year to 13%-14% from the previous 23%. This figure is also lower than the projection of the National Energy Council which estimates that the portion of EBT in the national energy mix in 2025 will be 17%-19%. For that reason, the government continues to accelerate EV vehicles, solar power plants for industries and also households.
  • The Institute for Energy Economics and Financial Analysis (IEEFA) also revealed that the investment for renewable energy has stagnated in the last 7 years. IEEFA noted that Indonesia was only able to attract investment in the renewable energy sector at the level of USD 5 billion over the past year, with an additional capacity of 574 MW, where 145 MW itself came from Cirata Floating Solar Power Plant.
  • One of the obstacles is due to the partnership obligation with PLN’s subsidiary, where PLN will have a majority share of at least 51%, which ultimately reduces investors interest in the renewable energy sector in Indonesia.

• Raw Water Facility in New Capital City Project
  • The Task Force for the Implementation of the Infrastructure Development of New Capital City Nusantara Project reported that the raw water treatment system from the Sepaku Semoi Dam and Sepaku Intake is prepared to supply water needs for the next
  • The Sepaku Semoi Dam, which is about 25 kilometres from the Nusantara area, has a capacity of 2,500 litres per second (lps), while the Sepaku Intake, 8 kilometres from IKN, has a capacity of 3,000 lps.
  • In the initial stage of the master plan for the Nusantara development of 2022-2024, the Ministry of Public Works and Public Housing began utilizing raw water from the Sepaku Intake with a capacity of 300 lps or equivalent to 10% of the available capacity and will add another processing facility from the Sepaku Semoi Dam of 350 lps once the demand for raw water rises.
  • At present, the raw water is managed using a portable water system that allows water purification until it can be consumed directly from the tap. Raw water from Sepaku Intake has a capacity of 2 x 6,000 cubic meters, can supply water needs of up to 6 million liters for 100,000-150,000 people.

• Genting Investment in Sentul City
  • Malaysian company Genting Plantations Berhad (GENP) has signed sales and purchase agreements with three landowners, namely PT Sentul City Tbk (BKSL), PT Aftanesia Raya, and PT Primatama Cahaya Sentosa with a total area of 152 Ha in Sentul City, Bogor, West This purchase plan is estimated to be worth RM 593 million (USD134 million), aims to build a premium lifestyle center that includes leisure, entertainment, and premium shopping center.
  • The land purchase plan was revealed in Genting Plantations’ disclosure report to the Malaysia Stock Exchange. The purchase was made through subsidiaries PT Genting Properti Abadi (GPRA) and PT Genting Properti Jaya (GPRJ).

• Chery Build New Factory
  • Chinese automobile company, PT Chery Sales Indonesia (CSI) already has an assembly facility in Indonesia, a sharing factory owned by PT Handal Indonesia Motor.
  • The Indonesian government has made regulations requiring electric car manufacturers to increase Domestic Component Level (TKDN) from 40 percent to 60 percent, and 80 percent gradually. Chery is trying to meet the 80 percent regulation by building a new factory, as PT Handal’s facility could only accommodate up to 60 percent domestic component.
  • Chery is currently looking for land for the planned factory. No further details on the land size or location preference.
  • In early June 2024, PT Handal shared its plan to establish a new factory to accommodate a larger vehicle production capacity of up to 90,000 units per year from current 30,000 per year, on a new site of 38 hectares in Purwakarta Integrated Industrial Park, 60 km from the existing plant in Pondok Ungu, Bekasi, West Java.

• PGN, Likuid Nusantara Gas Sign MOU for LNG Collaboration in East Java
  • Gas distribution firm PT PGN has signed a MoU with small-scale LNG producer PT Likuid Nusantara Gas (PT LNG) to explore potential collaboration in East Java, aims to enhance the domestic gas supply infrastructure and market penetration.
  • The MoU outlines several areas of cooperation, including LNG sales to meet domestic gas demand, and joint studies on the development of gas infrastructure such as LNG terminals in Pasuruan, East Java, and operational and maintenance activities for gas facilities and infrastructure.
  • PT LNG, an integrated energy company, secured a potential allocation of domestic gas supply in September 2023, which is planned to be commercialized through LNG, mentioned a high demand for natural gas in Java, which requires various modes of transportation, including pipelines, CNG, and LNG.

• PLN, Salim Group Partner on Solar Power Plant Project
  • PT PLN Batam has entered into a Shareholder Agreement and Equity Funding Agreement with PT Aruna Cahaya Pratama, a unit under the well-diversified Salim Group, in connection with the development of a 100 megawatt peak (MWp) solar power plant. This agreement involves co-investing in PT PLN Batam’s shares in PT Aruna Hijau Power (AHP) for the solar project, which will be located in PT Tata Jabar Sejahtera’s business area.
  • The 100 MWp Tata Jabar solar power plant, set to become the largest ground- mounted solar facility in Indonesia, aligns with PLN Batam’s commitment to supporting PLN’s broader transformation goals and Indonesia’s target of achieving Net Zero Emissions by 2060.
  • The Tata Jabar solar power plant, which features nearly 170,000 solar panels spread over more than 85 hectares within the Kota Bukit Indah Industrial City area in Purwakarta, West Java, has been completed ahead of schedule. Kota Bukit Indah Industrial City is developed by Salim Group to facilitate its business diversification, focusing more on land leasing, reserving areas for Salim’s internal business.

• Indonesia’s Purchasing Manufacturing Index in July 2024
  • Indonesia’s manufacturing industry fell from an expansion position to a contraction position. This is reflected in Indonesia’s Purchasing Managers Index (PMI) in July 2024, released by S&P Global.
  • In the report, the manufacturing PMI Indonesia fell from 7 as of June 2024 to 49.3 as of July 2024. An index below 50 indicates the industry is contracting. While an index above 50 indicates the industry is in an expansion position. This contraction is the first time after 34 consecutive months of expansion. Since the last few months, Indonesia’s manufacturing industry has been under a lot of pressure.
  • Minister of Finance, Sri Mulyani, admitted that demand has been declining, unsure whether it is due to seasonal impacts or trade Weakening demand is also influenced by foreign factors, especially exports because several countries are currently experiencing economic downturns, including the United States and China.
  • PMI calculations tend to involve industries such as textiles and Meanwhile, industries such as downstream to coconut palm oil (CPO) are not included in the calculation.

-end-

REFERENCES 

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