President Joko “Jokowi” Widodo ordered the Investment Ministry to increase the investment target for 2022 to Rp 1.2 quadrillion, up 30 percent from the target of Rp 900 trillion last year.
By
KOMPAS EDITOR
·3 minutes read
Caption: One of the containers containing MSME processed soap to be exported to Arika and the Middle East via Tanjung Priok Port, Jakarta, Saturday (15/1/2022). ARCHIVES OF THE MINISTRY OF COOPERATIONS AND SME
The investment target for 2022 of Rp 1.2 quadrillion (US$83.8 billion) is considered ambitious. A number of uncertainties linger from within the country and on the global market.
President Joko “Jokowi” Widodo ordered the Investment Ministry to increase the investment target for 2022 to Rp 1.2 quadrillion, up 30 percent from the target of Rp 900 trillion last year. Meanwhile, in the 2020-2024 Medium-Term Development Plan (RPJMN), the investment target is Rp 968.4 trillion.
Some researchers and business actors said the target was difficult to achieve, taking into consideration the achievement of investments at present (Kompas, 17/1/2022). According to data from the Investment Ministry, the investment achievement for the January-September period in 2021 was only 73.3 percent of the target or valued at Rp 649.4 trillion.
We can understand the President's desire to increase the investment target, namely to enable national economic growth in 2022 to grow above 5 percent, like before the Covid-19 pandemic. In 2020, the national economy grew minus 2.1 percent and in 2021, it is estimated to have grown 3.7 percent. This year, the economy is predicted to grow 5.2 percent and in 2023 it will grow 5.1 percent (World Bank, January 2022).
Direct investment is important for the creation of quality employment in the formal sector for 2.5 million people each year, secondary economic activities and economic growth. Investments can come from corporations, cooperatives and small and medium-sized businesses that are developed to be strong and formal.
Indonesia has various attractions for investors. The World Bank said that by 2020, 20 percent of the 270 million population would enter the middle class and 115 million people have the potential to become middle class. They are a market and at the same time, a source of labor.
Kompas/Heru Sri Kumoro (KUM)
Workers work on the construction of the Serpong - Balaraja (Serbaraja) Toll Road in Situ Gadung, Pagedangan District, Tangerang Regency, Banten, Sunday (8/1/2022). The Serbaraja Toll Road is 39.4 kilometers long. This toll road is expected to increase Jakarta's connectivity to Merak and Lampung.
The country is rich in natural agricultural, marine, mineral and mining resources. The processing industry will minimize the risk of commodity price cycles. We are a country with high internet adoption and the digital market is still growing. We are also a country with a high number of Covid-19 vaccinations.
However, the challenges come from the presence of the Omicron variant and the possibility of the emergence of a new strain of Covid-19. Disruption of global supply chains, climate change and geopolitical tensions can change investment decision choices. More than that, competition from other countries that also want to attract investment and the change of business models are line with digital developments and climate change.
Another challenge is certainty on regulations, including the direction of improvements to the Job Creation Law. The risk factor that cannot be ignored is domestic politics, especially the change of leadership in 2024.
We can control a number of factors, such as mitigating the Covid-19 pandemic with vaccinations and health protocols, maintaining political stability and ensuring that new leaders in 2024 continue their commitment to investment, digitizing the investment registration system and providing tax incentives. We can set the target as high as possible, but the factors to support success must be available.
