China’s Investments in Indonesia: 2024 Outlook

Posted by Written by Giulia Interesse Reading Time: 4 minutes

China’s investment in Indonesia spans key sectors like manufacturing, transportation infrastructure, renewable energy, and EVs, bolstering bilateral ties. With Indonesia actively promoting projects to attract Chinese investors, both nations are set to deepen collaboration, fostering sustainable development and economic integration.

China’s role as a significant foreign investor in Indonesia has been growing steadily, and 2024 is turning out to be a crucial year in this evolving relationship.

In this article, we explore China’s current investments in Indonesia, the potential benefits and challenges they present, and what this means for the future of Sino-Indonesian relations.

China’s investment in Indonesia: Key trends and sectors

In 2023, Southeast Asia received around 50 percent of China’s regional investments, marking a 27 percent increase from the previous year. Indonesia emerged as the leading recipient of these funds, attracting approximately US$7.3 billion.

During a bilateral meeting at the Merdeka Palace on September 8, 2023, Indonesian President Joko Widodo and Chinese Premier Li Qiang confirmed a new investment pledge of US$21.7 billion from China, covering sectors such as e-commerce, industry, agriculture, fisheries, science and technology, and innovation.

This agreement builds on a previous US$44.89 billion commitment made in July of the same year. Additionally, the two countries agreed on the Financing Facilitation for the China-Indonesia “Two Countries, Twin Parks” initiative, further solidifying their economic ties under the Belt and Road Initiative (BRI).


The manufacturing sector has become the primary recipient of Chinese investment in Indonesia. Chinese foreign direct investment (FDI) has played a significant role in supporting Indonesia’s dominance in the nickel market, with projects like the Morowali Industrial Park in Central Sulawesi, heavily backed by Chinese investment.

Additionally, Chinese investors are rapidly entering Indonesia’s electric vehicle (EV) market, exemplified by companies like Yadea and BYD establishing manufacturing facilities, contributing to Indonesia’s industrial capacity and infrastructure development in downstream sectors aimed at creating value-added products.

Transportation infrastructure

China’s investment in Indonesia’s transportation sector has been marked by significant contributions, notably the development of the Jakarta-Bandung high-speed railway. This flagship project, largely funded by China with an investment of US$7.3 billion, exemplifies the robust collaboration under the Belt and Road Initiative. The high-speed rail, which became operational in October 2023, has improved travel between Jakarta and Bandung, reducing travel time from over three hours to around 40 minutes.

During their meeting in September 2023, Premier Li Qiang and President Widodo discussed several investments, with China pledging US$21.7 billion across various sectors, including transportation. In that same occasion, Premier Li emphasized China’s readiness to collaborate on the successful launch of the high-speed railway, showcasing the deepening economic ties and the strategic importance of transportation infrastructure in their bilateral relationship.

Renewable energy and EVs

China’s investment in Indonesia’s renewable energy sector is pivotal as the country navigates its energy transition. The technological advancements developed in China are crucial for Indonesia to achieve its ambitious goal of 34 percent renewable energy generation by 2030.

Chinese investments in Indonesia’s renewable energy sector are substantial and multifaceted. At the 2023 Indonesia-China Business Forum in Beijing, eleven deals worth US$12.6 billion were signed, focusing primarily on electric vehicle batteries and clean energy projects. Additionally, earlier in 2023, Xinyi Glass Holdings from China announced a US$11.5 billion investment to build a quartz sand processing plant on Indonesia’s Rimpang Island, essential for solar panel production.

Moreover, in January 2024, Chinese EV manufacturer BYD built a US$1.3 billion plant in the country. This new facility, with a capacity to produce 150,000 units annually, marks a significant boost to Indonesia’s burgeoning EV industry.

Additionally, BYD introduced its three new EV models—BYD Seal, BYD Atto 3, and BYD Dolphin—to the Indonesian market during an event in Jakarta. Coordinating Minister for Economic Affairs Airlangga Hartarto hailed the investment as a move that will strengthen Indonesia’s position in the global EV market. This investment is also part of a broader trend, driven by Indonesia’s vast nickel reserves which are essential for EV battery production.


Chinese investors are increasingly drawn to Indonesia, captivated by its growing market potential and diverse investment opportunities. However, their enthusiasm often meets significant hurdles, particularly in navigating Indonesia’s complex regulatory environment. This regulatory labyrinth includes policies from both central and regional governments, often leading to confusion and delays.

Domestic Indonesian businesses find it relatively straightforward to navigate local investment requirements, including permits, land acquisition, and employment regulations. This familiarity places foreign investors at a distinct disadvantage. Establishing effective communication channels is crucial to providing comprehensive and accurate information, thereby deepening the partnership between companies from both nations.

Energy, mining, financial services, automotive, healthcare, and the green economy remain particularly attractive sectors for Chinese investors. Given the burgeoning interest in these areas, focusing on investment proposals within these sectors can help attract and accommodate Chinese capital more effectively.

The government provides various incentives to facilitate these investments, including income tax discounts and comprehensive support throughout the investment process. This support encompasses managing the exploration stage, consulting services, permit facilitation, and communication with relevant parties. These measures are designed to smooth the capital flow from China and enhance investor confidence.

2024 outlook

China remains a pivotal source of capital for Indonesia, playing a crucial role in the country’s foreign direct investment landscape. As of 2024, the Indonesian government actively promotes 81 projects across diverse business sectors to attract Chinese investors. These projects, included in the Regional Investment Potentials list, span various sectors such as economic zones, real estate, tourism, agro-industry, renewable energy, industry, infrastructure, and industrial estates.

The total investment required for these projects, distributed across all 34 provinces of Indonesia, amounts to approximately Rp239 trillion (approx. US$14.7 billion). This significant investment drive underscores Indonesia’s commitment to bolstering its economic ties with China. At a recent Indonesia-China Investment Promotion event, Riyatno, Deputy for Investment Cooperation at the Investment Ministry/Investment Coordination Board, emphasized China’s continuous and substantial contributions to Indonesia’s investment landscape.

The Indonesian government is highlighting the 81 projects and offering additional investment opportunities in renewable energy, natural resource downstreaming, and the development of Nusantara Capital City (IKN). In the tourism sector, notable investment opportunities include destinations such as Lake Toba, Borobudur, Labuan Bajo, Mandalika, and Likupang.

As efforts continue to facilitate investments and explore new opportunities, Indonesia and China are poised to deepen their collaboration, driving sustainable development and fostering greater regional economic integration.

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