Investment speeds up in first quarter, opportunities in Merauke’s sugar industry 

01 May 2024


Indonesia reported an investment realization of Rp 401.5 trillion (US$24.7 billion) in the first quarter of 2024, representing a 22.1% increase from the previous year, according to data released by Ministry of Investment (BKPM) on Monday, April 29, 2024. 


The Q1 result, which covers both domestic and foreign investments covers 24.3% of Rp1.65 quadrillion target set by President Joko Widodo for the year. 


Foreign Direct Investment (FDI) growth slowed to 15.5% year-over-year in the first quarter, experiencing a lower growth rate compared to 20.2% growth in the same period last year. This sluggish FDI growth was offset by a robust 29.7% increase in domestic investments. 


Nevertheless, FDI continues to play a major role in Indonesia's investment landscape, comprising over half of the total investment for the first quarter. The largest contributions originated from Singapore and China, with significant amounts also coming from Japan and the United States. 


Sector-wise, in the first quarter, the metal processing sector led investment inflows in Indonesia, drawing Rp48.1 trillion, primarily from FDI. Close behind were the logistics and telecommunications sectors, which attracted investments of Rp48 trillion, while the mining sector secured Rp42.3 trillion. 


Meanwhile, the food and beverage sector experienced a significant investment boost in the first quarter of this year, positioned as the fifth-largest contributor to overall investment with Rp29 trillion. Notably, domestic investors provided most of this funding, contributing 65 percent of the total investment in the sector. 


Potentials for investment in Merauke 


The Ministry of Investment also highlighted potential investment opportunities in Merauke, South Papua, specifically the development of a sugar-based industry. The region has 2 million hectares (ha) of sugarcane land area. 


Deputy for Investment Implementation Control at BKPM Yuliot announced that five consortiums, both from the private sector and state-owned enterprises, will oversee the development of this extensive project. It encompasses five sugar factories, associated lands, bioethanol production facilities, plantations, and power plants with a combined capacity of 120 megawatts (MW), as reported by Bloomberg Technoz. 


The Ministry of Energy and Mineral Resources also revealed the government’s plan to use half of this sugarcane land for bioethanol production, an eco-friendly alternative to the subsidized fossil fuel Pertalite or Pertamax, with a production target set for 2027.     


Currently, confirmed to manage the sugarcane land is PT Sinergi Gula Nusantara (Sugar co). According to Sugar co President Director Aris Toharisman, the company is actively seeking investors to develop sugarcane fields and factories in South Sumatra, Lampung, South Sulawesi, and Merauke. 


“The plan is that Sugar Co will manage sugarcane land in Merauke with partners or investors. Until now we have not received investors, we are still in the process of searching, both investors for the management of sugar cane land and sugar factories in South Sumatra, Lampung, South Sulawesi and in Merauke,” said Aris, as per Bloomberg Technoz on April 29, 2024.