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The Future of Asia 2019

Indonesia plans new measures to lure overseas investment

Minister of Industry says country aims to become ASEAN's manufacturing hub

Indonesia's industry minister Airlangga told Nikkei's Future of Asia on May 30 that the country was discussing the creation of a "ASEAN 4.0" with Thailand and Singapore. (Photo by Yuki Nakao)

TOKYO -- Indonesia will put in place new incentives to attract foreign investment in a bid to turn the country into ASEAN's manufacturing hub, industry minister Airlangga Hartarto said at Nikkei's Future of Asia conference here on Thursday.

During President Joko Widodo's recently won second term, "I guarantee you that... [Widodo] will take strong and speedy measures to implement pro-investment as well as pro-business policies," Airlangga said.

Indonesia already grants a tax holiday to companies investing in the country and allows 200% deductions on expenses related to research and development on electric vehicles. Airlangga said additional incentives are planned. In particular, the country is developing a roadmap for building a strong base of low-emission vehicle manufacturers, he said.

Referring to global trade challenges, especially U.S.-China trade tensions, "we need to have more collaborations among countries," Airlangga said. He called for the Association of Southeast Asian Nations to "create a manufacturing value chain," that produces products that are accepted by the global market.

Airlangga cited the importance of developing an industry 4.0 that is supported by such technologies as artificial intelligence and the internet of things. These "4.0 technologies will strengthen our inclusive economy policy," he said, because it relies on the collaboration between smaller enterprises with large companies.

The minister said Indonesia is discussing an "ASEAN 4.0" with Thailand and Singapore -- including an arrangement that would enable certain goods to be traded custom-free over e-commerce platforms. He said Indonesia can help ASEAN to become "one of the most stable regional economies."

Airlangga said he aims for the startups and tech companies to contribute $150 billion to the Indonesian economy by 2025, up from the current $10 billion. Including Bukalapak and GoJek, Indonesia is home to four of the seven Southeast Asian unicorns.

"We can produce more unicorns and even decacorns," Airlangga said, referring to private companies worth $1 billion and $10 billion. He revealed that the country is expecting to see at least two more unicorns in the "next one or two years."

Rurika Imahashi contributed to this report.

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