Analyst Says Japanese Investment Continues to Grow in Indonesia
Data from the Ministry of Investment and Downstreaming – Investment Coordinating Board (BKPM) shows that realised Japanese investment in Indonesia for the 2021–2025 period grew by an average of 13.2%. The accumulated investment, valued at USD 17.1 billion, has absorbed 278,887 workers. To date, Japan remains the fifth-largest investor in Indonesia.
Investment and international relations analyst Zenzia Sianica Ihza stated that the criticism voiced by Japanese entrepreneur Yutaka Tokunaga regarding the many memorandums of understanding (MoUs) that never materialise into projects is not entirely accurate. “The data tells a different story. Japanese investment continues to grow positively and remains one of the largest investors in Indonesia. So that cannot be used as a comprehensive picture of the investment climate in the country,” Zenzia was quoted as saying on Wednesday (9/6/2026).
Previously, a Japanese entrepreneur who has long done business in Indonesia highlighted a recurring phenomenon in Japan–Indonesia business relations: the signing of numerous MoUs that end without clear project realisation. In an article published on 1 June 2026, Yutaka Tokunaga, CEO of a technology company based in Indonesia and Japan, questioned the many MoU signings that often garner significant attention, yet project developments are rarely heard of afterwards.
In Zenzia’s view, in international business practice, an MoU is fundamentally an initial exploratory instrument that does not always culminate in an investment contract. Therefore, he deemed it inaccurate to measure the effectiveness of Indonesia-Japan economic relations solely by the number of MoUs successfully realised into business projects. “Around the world, an MoU is the initial stage for building commitment and exploring cooperation opportunities. Not all MoUs reach the implementation stage. Many stop after feasibility studies due to business considerations, market changes, or investment risk evaluations,” Zenzia said.
One more relevant indicator for measuring investor confidence is the actual investment realisation entering the national economy. Zenzia noted that for Indonesia-Japan relations, the data shows a positive trend. “If Japanese investors did not trust Indonesia, they would not continue to increase investment every year and expand their production bases here,” he stated. Citing BKPM data, Zenzia pointed out that over the last five years, Japan has continued to place Indonesia as one of the most important investment destinations in the Southeast Asian region. “What needs to be observed is the fact that Japanese companies are not leaving Indonesia. They are continuing to add investment, expand production facilities, and make Indonesia a regional manufacturing base. That is a far more important indicator of trust than the number of MoUs signed,” Zenzia said.
Nevertheless, Zenzia acknowledged several challenges that remain complaints among Japanese investors, including layered bureaucratic processes, central and regional regulation synchronisation that is not yet fully harmonious, land acquisition processes, and occasional technical policy changes in the middle of project execution. Given the characteristics of Japanese investors who highly prioritise certainty, these issues often become primary concerns. “Japanese investors are known to pay close attention to planning details, legal certainty, project schedule certainty, and policy consistency. They usually do not mind a lengthy process as long as the direction is clear and predictable,” he stated.
Therefore, the government needs to use various inputs from Japanese business players as evaluation material to enhance national investment competitiveness. Zenzia suggested several steps to be taken: first, strengthening investment aftercare post-MoU signing so that every project has clear and measurable implementation targets; second, harmonising regulations between central and regional governments so investors do not face different rules in the field; and third, maintaining transparency in the decision-making process, particularly for strategic projects involving many ministries, institutions, and regional governments. “The narrative is not that Japanese investors are losing trust in Indonesia. What is happening is they desire continuously improving governance quality so that Indonesia’s great potential can be translated into faster and larger investment realisation. The investment data from the last five years proves that trust remains very strong,” Zenzia concluded.