Indonesia Must Compete with Vietnam's Attractive Investment Incentives, Says BKPM Official
Jakarta — The Indonesian government faces stiff competition from Vietnam in attracting investment. According to Nurul Ichwan, Deputy for Investment Promotion at the Ministry of Investment and Downstreaming/BKPM, Vietnam offers a number of highly attractive incentives to investors, including land rent exemptions for businesses investing in the country — a benefit extended even to large companies that can well afford to pay.
"There is one attractive incentive offered by the Chinese and Vietnamese governments. They can provide land rent exemptions. So imagine, even large companies that are actually able to pay land rent still receive this benefit," he said at the detikcom Indonesia Investment Talk Series in Jakarta on Wednesday (30 April 2025).
Beyond land incentives, the Vietnamese government also offers to construct buildings for investors. According to Nurul, such incentives would be difficult to replicate in Indonesia, where even the process of land acquisition alone is enormously complicated.
"There are even more extreme cases — not just land rent, but the state actually builds the facility for you. In our case, let alone giving away land, just trying to acquire land is incredibly complicated. That's the reality," Nurul explained.
Nurul suggested Indonesia could learn from several countries regarding investment incentives, though he maintained that Indonesia need not offer excessive inducements given its abundant natural resources, which are inherently attractive to investors.
He argued that whilst it is understandable for resource-poor nations to offer generous incentives to lure investment, Indonesia's natural wealth already constitutes a powerful incentive in its own right.
"There is much we can learn from many countries, but in our view we don't need to be that generous with incentives, because we are Indonesia — as our colleagues have mentioned, we are rich in natural resources," said Nurul.
"Countries that are poor and lack natural resources may need to roll out all manner of incentives to attract investors. But our extraordinary natural resources are themselves another natural incentive," he concluded.
"There is one attractive incentive offered by the Chinese and Vietnamese governments. They can provide land rent exemptions. So imagine, even large companies that are actually able to pay land rent still receive this benefit," he said at the detikcom Indonesia Investment Talk Series in Jakarta on Wednesday (30 April 2025).
Beyond land incentives, the Vietnamese government also offers to construct buildings for investors. According to Nurul, such incentives would be difficult to replicate in Indonesia, where even the process of land acquisition alone is enormously complicated.
"There are even more extreme cases — not just land rent, but the state actually builds the facility for you. In our case, let alone giving away land, just trying to acquire land is incredibly complicated. That's the reality," Nurul explained.
Nurul suggested Indonesia could learn from several countries regarding investment incentives, though he maintained that Indonesia need not offer excessive inducements given its abundant natural resources, which are inherently attractive to investors.
He argued that whilst it is understandable for resource-poor nations to offer generous incentives to lure investment, Indonesia's natural wealth already constitutes a powerful incentive in its own right.
"There is much we can learn from many countries, but in our view we don't need to be that generous with incentives, because we are Indonesia — as our colleagues have mentioned, we are rich in natural resources," said Nurul.
"Countries that are poor and lack natural resources may need to roll out all manner of incentives to attract investors. But our extraordinary natural resources are themselves another natural incentive," he concluded.