Food Industry the Most Attractive Sector for Investment Over the Past Five Years
The Investment Coordinating Board (BKPM) recorded that over the past five years (2015 – Q1 2020), investment realisation in the manufacturing sector reached Rp1,348.9 trillion. The most sought-after main sector was the Food Industry, with investment reaching Rp293.2 trillion, equivalent to USD21.4 billion, accounting for 21.7 per cent of total investment.
It was followed by the Base Metals, Metal Goods, Non-Machinery and Equipment Industry, which showed an increase in 2019 and Q1 2020 with total investment reaching Rp266.7 trillion, or equivalent to USD19.4 billion. The Chemical and Pharmaceutical Industry ranked third with an investment value of Rp243.9 trillion, or equivalent to USD18.1 billion.
“The manufacturing sector is experiencing challenges as well as significant leaps in the era of digital technology and internet advancement, often referred to as the Industry 4.0 era. There are at least five industrial sectors that are the backbone of Making Indonesia 4.0, namely the food and beverage industry, textiles and apparel, automotive, chemicals, and electronics,” said BKPM’s Acting Deputy for Investment Implementation Control, Farah Indriani, in a statement on Wednesday (27/5).
She stated that the manufacturing sector has great potential to increase much further with the advancement of technology and the internet, considering that the production process will be more efficient. In addition, Indonesia also has advantages from its geographical location and the support of its domestic market. It can even be used as a manufacturing hub in the ASEAN region.
“These figures are a reflection that it cannot be denied that Indonesia’s domestic market is an investment magnet, especially for the food and beverage industry. Among the two other sectors mentioned above, only the food industry has a larger portion of domestic investment (PMDN) than foreign investment (PMA). Here we are confident that this industry will be quite stable against global economic shocks,” she asserted.
Nevertheless, BKPM’s investment realisation data for the food industry sector over the past five years shows fluctuations. However, on average, it has increased by 3 per cent per year and remains at the top rank of total secondary sector investment realisation. In 2017, the Food Industry reached its highest peak with total investment reaching Rp64.8 trillion, or valued at USD4.86 billion. Conversely, the investment realisation of the base metals industry over the past five years, although not always at the top, shows great potential as seen from its average growth reaching 11 per cent per year.
“If we trace the Food Industry data, indeed the increase is not as much as investment in the Base Metals Industry. The increase in investment in the Base Metals Industry is also a signal that industrial development in the country is progressing rapidly. Indonesia remains trusted by both domestic and foreign investors,” she concluded.