Indonesian President-elect pays attention to domestic market to attract investors

Indonesian President-elect Prabowo Subianto (Photo: AFP)

Jakarta (VNA) – The Indonesian incoming administration led by President-elect Prabowo Subianto will highlight the country’s large domestic market to attract foreign investors.

Drajad Wibowo, an economic expert on Prabowo’s campaign team, said that in addition to the advantage of being the world’s fourth-most-populous country, Indonesia sees the abundance of raw materials as another selling point, much like incumbent President Joko Widodo.

Regarding the sector that Prabowo will focus on for foreign investment, Drajad said the President-elect will push for developing downstream industries based on 21 locally sourced commodities, including coal, nickel, oil palm products, biofuel and timber.

Drajad said Indonesia had been too focused on just making crude palm oil (CPO) from palm fruit when there were plenty of other derivative products that could be produced.

A lot of palm derivatives can be used for food and beverages. The food and beverage market in Indonesia is huge, and the country is still not consuming enough domestically sourced ingredients, said Drajad.

The appeal of Indonesia’s domestic market with a population of about 270 million is attractive enough to lure investors, he said.

He said the ultimate goal is to export the downstream products under the assumption that, once it got a strong foothold in Indonesia, a product could expand to other Asian markets, effectively making the archipelago a “stepping stone” for investors.

Drajad also mentioned the export potential of wood products, which commonly ended up as construction materials or pulp and paper but can instead be processed into rayon, a high-end fashion material.

However, Drajad admitted that it is impossible to apply the downstream agenda to all of the 21 commodities, given resource limitations. Therefore, one of them will become Prabowo’s flagship, much like nickel to Jokowi, he added.

Drajad also said Prabowo will focus on boosting investment in labour-intensive businesses, including in agriculture.

He reiterated that Prabowo will push the much-discussed food estate project, which can complement Prabowo’s free school lunch and nutrition programme.

The programme targets more than 82 million students from preschool to senior high school and is expected to cost at least 100 trillion IDR (6.32 billion USD) in its initial year and 460 trillion IDR a year once it reaches full scale in 2029.

That number is equal to 12% of Indonesia’s state budget this year and approximately 2% of the country’s GDP/.