ABSTRACT
This article discusses the rapid growth of Chinese corporate investments in Indonesia. The recent visit of Investment Minister Rosan Perkasa Roeslani to China resulted in an investment commitment of USD 7.46 billion, including electric vehicle projects and the development of an integrated ecosystem. From 2019 to 2024, Chinese investments have been dominated by the basic metal, transportation, and chemical industries, with a focus on areas outside Java. Through investment policy evaluation and the implementation of the OSS RBA system, the government aims to anticipate global changes and ensure the sustainability of these investments to support national economic development.
The investments of Chinese companies in Indonesia have become an increasingly interesting topic recently, as the two countries have strengthened their strategic partnership. The recent visit of the Minister of Investment and Downstream Industry / Head of the Indonesian Investment Coordinating Board (BKPM), Rosan Perkasa Roeslani, to China has revealed the latest developments. Minister Rosan held a series of meetings with major Chinese companies, including Geely Auto Group (a leading global automaker that holds shares in several top European brands such as Volvo, Daimler, and Lotus) and Zhenshi Holding Group Co., Ltd.
The visit has resulted in significant new investment commitments from China, with a total of USD 7.46 billion (approximately IDR 120 trillion). Geely has committed to collaborating with Indonesian companies on electric vehicle assembly, and the company is also exploring the potential to develop a fully integrated ecosystem, including refining, battery production, and battery recycling. In addition, Geely is currently developing methanol-powered vehicles and sees Indonesia as a promising market, considering Indonesia is the world’s largest producer of palm oil, a key source of methanol.
Previously, on the date of the state visit on November 8-10, 2024, the President of the Republic of Indonesia, Prabowo Subianto, secured an investment commitment worth more than USD 10 billion. The bilateral meetings between President Prabowo and Chinese President Xi Jinping agreed to strengthen relations between the two countries.
In relation to business licensing, Law 25/2007 on Investment, which has been amended by Government Regulation in Lieu of Law No. 2 of 2022, stipulates that investment companies that will carry out business activities must have a business license from the government. In this case, Law 25/2007 also states that government policies in investment are designed with various considerations, including to anticipate global economic changes and accelerate Indonesia’s economic development.
Although Law 25/2007 does not explicitly regulate the OSS RBA (Online Single Submission Risk-Based Approach), the Circular Letter of the Minister of Investment/Head of BKPM No. 14 of 2021 states to business people about the mechanism of the transition process for the implementation of licensing which has changed to implementation through the OSS RBA system.
With the official transition from the usual business licensing system to OSS RBA, since July 2, 2021, businesses have been able to use the OSS RBA system. This is clear evidence of Indonesia’s efforts to use digital technology in investment administration, aligning with global trends toward e-governance. As emphasized in BKPM Regulation No. 3 of 2021, the business licensing subsystem in the OSS RBA can issue Business Identification Numbers (NIBs), standard certificates, permits, and Business Licenses to Support Business Activities (PB UMKU) for businesses people.
Currently, the Ministry of Investment/BKPM is initiating a study related to the evaluation of the Investment Law. In this regard, business people should take advantage of the OSS RBA system to ensure the completeness and compliance of their business licensing in accordance with current regulations. It is also recommended to periodically update business data on OSS RBA, monitor derivative regulations, and strengthen legal compliance to maintain competitiveness and business sustainability.
Indonesia and China have maintained diplomatic relations since 1950. Their economic relationship has grown significantly, particularly after the implementation of the ASEAN-China Free Trade Area in early 2010 and the Comprehensive Strategic Partnership between Indonesia and China in 2013. Chinese investment in Indonesia has continued to increase over the past few years, this is reflected by China’s increasing position from the 9th largest Foreign Investment in Indonesia in 2015, to the 2nd largest in 2019. From 2019 to September 2024, Chinese investment in Indonesia reached USD 34.19 billion / 18% of foreign investment.
In that period, Chinese investment in Indonesia was dominated by the base metal industry sector worth USD14.39 billion (42%); transportation, warehousing, and telecommunications amounted to USD7.98 billion (23%); chemical and pharmaceutical industry amounted to USD3.18 billion (9%); electricity, gas, and air amounted to USD2.70 billion (8%); and industrial, and residential areas amounted to USD2.21 billion (6%).
Based on location, Chinese investment is greater outside Java Island (67%) than Java Island (33%). The locations with the highest investment are Central Sulawesi with USD12.54 billion (37%), West Java with 7.19 billion (21%), North Maluku with 5.18 billion (15%), Jakarta with USD1.66 billion (5%), and Banten with USD1.34 billion (4%). The information and data on the investment realization of Chinese companies above are taken from the press release of the Ministry of Investment and Downstream / BKPM of the Republic of Indonesia.
