According to a report, Japanese direct investment in Indonesia has spiked in recent months, with the cumulative total for the first nine months of this year amounting to 1.16 billion US dollars – the amount already surpasses the total 2010 investment by more than 60%.
The growth in Indonesia has no doubt been spurred by the tumultous activity elsewhere, as Japanese companies, hit first by the Tohoku earthquake and then by the flooding in Thailand, seek to establish manufacturing bases in Indonesia in a bid to rebuild their supply networks. Another factor is the raw potential of Indonesia as a consumer market, with a population exceeding 200 million.
The report adds that auto and consumer appliance sectors are leading the charge into the country. Japanese-affiliated automakers now control 90% of the local car market, where sales are expected to reach a million units within a few years. With that in mind, Toyota, Nissan and Daihatsu are stepping up investment in the country.
Parts makers are also jumping in, among them companies such as Nifco, a leading maker of plastic parts for automobiles. It’s building a factory in Indonesia to accommodate efforts by the automakers to increase local procurement ratios of finished cars.