Indonesia will push nine subsidiaries of state-controlled companies to undertake initial public offerings this year to raise a total of up to Rp 21 trillion ($1.57 billion) in fresh funds. (Antara Photo/Audy Alwi)

Japanese Company to Build Three Shopping Centers in Greater-Jakarta

BY :TABITA DIELA

JUNE 07, 2016

Jakarta. A Japanese company plans to invest around Rp 900 billion ($68 million) to build three shopping centers in the Greater-Jakarta area in the next two years, raising hopes that it would boost much-needed foreign investment in the country and spur the sluggish property market.

The unnamed Japanese company is currently scouting locations in Jakarta, Bogor, Depok, Tangerang and Bekasi, Investment Coordinating Board (BKPM) chairman Franky Sibarani revealed in a statement on Tuesday (07/06).

"They already have an experienced local partner and they are only waiting to find the right locations. After the three shopping centers in Jabodetabek have been built, they will start scouting for new locations in Surabaya [East Java] and Makassar [South Sulawesi]," he said.

Japan is among Indonesia's 10 priority sources of foreign investment. Investment commitments by companies from the East Asian country soared by 40 percent last year compared to the year before.

Investment realization from Japan — mostly in the manufacturing sector — increased 6 percent to $2.87 billion last year with 2,030 projects that created 115,400 jobs. As of the end of the first quarter this year, Japan has invested $1.6 billion, up 32 percent from the same period a year earlier.

Property consultant Savills predicted that retail will become one of the earliest sectors in the property market to grow the fastest amid the slowdown on the back of strong purchasing power that meets high consumption among city dwellers, Savills retail department director Rosaline Lie said in a note.

"These things will trigger higher demand for retail, especially if the economy significantly improves in the short term," she said.

Consultancy firm A.T. Kearney ranked Indonesia among the most attractive places for investment in the retail sector globally, due to the country's huge population of 256 million, rising middle class, growing Internet penetration and friendly policy toward foreign investment.

However, the yet-to-be-identified Japanese company will face strong competition with other players in the retail sector as its plan will increase the supply of retail space in the capital and its surrounding areas. There are currently more than 170 shopping malls in the Greater-Jakarta area alone.

SHARE