Chinese foreign direct investment in Indonesia: trends, drivers and impacts

In Indonesia, no systematic study of Chinese FDI has been undertaken to date. This paper contributes to filling this research gap and analyses the current composition as well as the historical evolution of Chinese FDI in Indonesia, relying on a survey conducted in 2008 among Chinese invested enterprises supplemented with key informant interviews, available official statistics and secondary data. Considering the evolution of Chinese investments in Indonesia over time, investments have evolved from being individual and isolated projects to acquiring more systemic properties. Chinese companies have acquired a broader sectoral presence in Indonesia and Chinese invested companies in, e.g., extractive or manufacturing activities can increasingly rely on complementary Chinese investments in logistics, travel, finance, etc. Where the local development effects are concerned, a picture emerges where Chinese investments, at this early period of their internationalisation, are likely to give rise to a more modest extent of positive spillovers than investors from more economically advanced countries.