The United Arab Emirates (UAE) has become one of Indonesia’s key investment partners ever since it established formal diplomatic ties with the latter in 1976. The UAE is expected to become the largest shareholder in the country’s investment authority, Sovereign Wealth Fund (SWF). Moreover, the UAE just unveiled a USD 10 billion investment plan in the archipelago that will be utilized to fund infrastructure projects like roads and ports, as well as tourism, agriculture, and other key industries.
Given Indonesia-UAE strong bilateral relations, and the archipelago’s growing economy with vast untapped natural and human resources sets an ideal stage for UAE investors to invest in Indonesia.
Why UAE Investors Should Invest in Indonesia
Indonesia’s bright Economic Outlook Beyond the Pandemic
The Indonesian government has set up IDR 695.2 trillion to combat the consequences of the Covid-19 pandemic and aims to stimulate the supply and demand sides of the economy.
The ministry has committed to several strategic goals for the year 2021 and the medium-term vision, including preparing a new healthy society, speeding the recovery of the social and health sectors, guaranteeing a rapid recovery of the economy, and innovating policies across sectors.
In addition, the Indonesian government has established the Indonesia Sovereign Wealth Fund (SWF), which would serve as a strategic investment and financing instrument. This fund will be used to support national development initiatives in Indonesia, such as significant infrastructure projects.
Stronger Relationship Than Ever Before
The UAE provided 20 tons of medical equipment to Indonesia and assisted over 20,000 medical professionals in the battle against the Covid-19. While the aid is just the latest in a series of such efforts, it highlights Indonesia’s growing ties with the UAE, which have become stronger since the Covid-19 pandemic began.
Number of Business-to-Business Deals
Indonesia’s president has signed 16 agreements with the Crown Prince of the United Arab Emirates, including five government-to-government agreements related to religion, education, agriculture, health, and counterterrorism. They majorly include 11 B2B deals in industries such as oil and gas, petrochemicals, ports, telecommunications, and research. The entire value of this investment is expected to be around IDR 314.9 trillion.
Indonesia-UAE Comprehensive Economic Partnership Agreement
Indonesia is one of eight nations with whom the UAE is negotiating trade agreements as part of its newly announced “Projects of the 50” plan.
The Indonesia-UAE Comprehensive Economic Partnership Agreement (IUAE CEPA) was formed jointly by the two countries. It is supposed to strengthen bilateral commercial connections, boost economic and investment possibilities, and usher in a new age of cooperation.
The IUAE CEPA builds on the UAE’s strong economic connections with Indonesia, laying the groundwork for long-term cooperation that expands business possibilities, draws more investment, and helps the global economy recover faster.
Indonesia-UAE Economic Relations: Top Five Sectors to Invest
Although Indonesia was not previously one of the UAE’s main energy users, a USD 270 million liquefied petroleum gas agreement was recently signed between the country’s state-owned energy company PT Pertamina and the Abu Dhabi National Oil Company (ADNOC). These deals were followed by a USD 3 billion long-term naphtha supply arrangement between ADNOC and PT Chandra Asri Petrochemical Tbk.
Food and Agriculture
Indonesia’s agriculture industry, which is supported by a diversified topography, has long been a significant source of income for local people and has also contributed largely to exports. The industry has been a foundation of the country’s economy with substantial developments in recent years and has been able to attract essential investment.
The Ministry of State-Owned Enterprises (SOEs) announced investment possibilities for 79 infrastructure projects with a valuation of USD 86.1 billion. It includes existing and new projects in industries, like energy, oil and gas, manufacturing, telecommunications, transportation, seaports and airports, construction, real estate, and property, and hotel and tourist.
Medicine and Pharmaceutical
According to a study by Indonesia’s Drug and Food Supervisory Body (BPOM), there are now 208 pharmaceutical businesses in the country, with 241 manufacturing medicines, 17 manufacturing pharmaceutical raw drugs, 132 traditional medicine industries, and 18 natural product extract industries.
Given that the majority of these businesses are involved in the formulation or production of medications, it’s conceivable why there’s such a large demand for imported pharmaceutical raw materials. As a result, the prospects of investing in the pharmaceutical sector look promising.
Indonesia’s digital economy has grown at an exponential rate in recent years, and it is anticipated to be worth USD 124 billion by 2025.
According to the DBS Bank survey “Indonesia Consumption Basket,” the number of e-commerce consumers in Indonesia grew to 66% when the Covid-19 epidemic hit the nation. A growing number of wealthy, tech-savvy consumers is altering the way the country consumes, opening up a plethora of options for international companies.
Commence Your Investment in Indonesia with Cekindo
Although bilateral relationship between Indonesia-UAE is getting stronger, still, forming a company in the archipelago entails a series of time-consuming and lengthy formal procedures. Having business registration specialists on your side, such as Cekindo, may save you a lot of time and make the process go smoothly.
Cekindo offers a comprehensive range of auxiliary services connected to company formation, including legal advice, the acquisition of business licenses and other papers, market research and due diligence to rule out any mishaps, and HR Recruitment Services.