RETAIL BUSINESS GROWS AS FOREIGN INVESTOR ACTIVITY INCREASES
INFLUX OF FOREIGN CONSTRUCTION COMPANIES UNSTOPPABLE
Number I | September 2016
RETAIL BUSINESS GROWS AS FOREIGN INVESTOR ACTIVITY INCREASES
Foreign investors are heavily investing in the retail sector . BKPM ( The Investment Coordinating Board ) fully supports the growth of investment in the sector based on the revision of the Negative Investment List ( DNI ) in 2016 . This revision is expected to increase the number of foreign investments entering the country .
According to a report from the Global Retail Development Index ( GRDI ) 2016 , Indonesia is ranked 5th based on its potential to grow within the retail business sector . Whereas in previous years , according to a survey conducted by the global consulting firm , A . T . Kearney , Indonesia was only ranked in 12th place . Through the GRDI index , the company measured the level of investment , potentiality , and traction of retail businesses in thirty countries around the world including Indonesia .
Some of the most important variables in the survey were the market segment , the level of risks , market penetration and the average growth of retail in the country . With Indonesia being in 5th place , it can be said that Indonesia has a positive ranking based on these variables . Some research found by the Indonesian media even indicates that the growth in the retail sector will continue to improve and increase until the end of the year . It is known that a few foreign retailers such as Lawson , IKEA , Lotte and much more intent on increasing their investment in Indonesia .
Reports from GRDI show that US $ 324 million has been reached from retail businesses in Indonesia . This has been the highest figure recorded by the GRDI since 2001 . According to the President Director of A . T . Kearney Indonesia , John Kurtz , there are a few factors that contribute to the increment of investment and willingness of foreign investors to invest in Indonesia . These factors include Indonesia ’ s large population plus the growing number of the middle class .
Additionally , the changes of calculation pattern by the GRDI have helped to formulate the real amount of retails sales in Indonesia . In contrast to last year , all reports calculated this year , include all types of retail stores , e-commerce , and even traditional retailers are included .
BKPM wants to utilize this thriving timing to grow retail businesses in Indonesia through the proposed revisions of DNI which announced by BKPM in February 2016 . This shows that the government wants to open up business opportunities for foreign investors particularly in regards to foreign business opportunities in the retail business sector . The proposed revision of DNI also states that department stores with an area of less than 2000 m2 can be supported through foreign capital by up to 67 %. Next , for supermarkets with an area below 1200 m2 and mini markets below 400 m2 , foreign investors can invest up to 33 %. For the e-commerce sector , it is proposed that foreign investors are allowed to invest the full 100 %.
An interesting point was brought up due to the development of the revision . Through the Presidential Regulation No . 44 on May 12th , 2016 , President Joko Widodo confirmed the approval of DNI 2016 that allowed foreign investors to invest up to 49 % in the e-commerce sector . This shows that even though the government wishes to boost foreign investment in Indonesia , at the same time , they understand the importance of protecting domestic businesses . Through the revisions of DNI , it is expected to help increase foreign investors without harming domestic investors .
( Source : BKPM )
INFLUX OF FOREIGN CONSTRUCTION COMPANIES UNSTOPPABLE
Data from the Investment Coordinating Board ( BKPM ) as of October 2016 shows that the majority of foreign construction companies expanding into Indonesia are those of China , followed by South Korea . The Indonesian Builders Association ( Gapensi ) observes that Chinese construction companies ’ expansion into other countries has been fully backed by the Chinese government . Aside from enhancing domestic market , the Chinese government also pushes construction companies to work on offshore projects regardless of language or cultural barriers .
Number III / December 2016 | Trade & Investment Bulletin 3