TOKYO -- Mahendra Siregar, chairman of the Indonesia Investment Coordinating Board, said his country's economy is "very much open" for international investment but warned that this must be done with sustainable development as the priority.
"There should not be any trade-off between development and economic integration goals," he told the 20th International Conference on The Future of Asia in Tokyo on Thursday.
Mahendra noted that the three key factors that have driven investment in Indonesia -- resources, cheap labor and middle-class consumption -- are only part of the country's effort to achieve long-term stable growth. As demographics in the country change, so will the nature of its path toward economic growth, he said, adding that long-term development would require less reliance on resources and more on entrepreneurs. This shift will mean modernizing some of the country's traditional foreign investment framework, he said.
"The policies being implemented in Indonesia today are largely based on past policies implemented in, for example, Europe, that undoubtedly contributed to the prosperity achieved in these advanced economies," he said. "Are we to be denied the same paving stones on this road to development?"
Mahendra defended recent curbs the Indonesian government has placed on foreign investment -- for example, limiting sectors permitted for national and international investors. While acknowledging that some investors are calling these restricted sectors a "negative list" in terms of opportunities, he stressed they should not be deterred.
"I am also a believer in the benefits of an open economy, but there is a need to transition (to a more sustainable model)," he said. "This transition does not mean that Indonesia is closed for investment."
Mahendra said global trading partners need to work with each others' mutual interests "to allow developed economies to maintain and improve their standards of living and at the same time allow developing economies to improve theirs."
The main objective of the "negative list" of sectors open to investors, he said, is to increase the quality of foreign direct investment through sustainable investment.