Partners in Prosperity: U.S. Investment in Indonesia

Thursday, October 3, 2013 - 8:00pm

EXECUTIVE SUMMARY

Impact, Partnership, Progress: U.S. FDI in Indonesia

The long story of U.S. foreign direct investment (FDI) in Indonesia begins in 1924 when geologists from Standard Oil of California (now Chevron) were trekking through the jungles of Sumatra. Those early explorers found what became the Duri field, one of the biggest oil finds in Indonesia, ushering in a lasting and positive relationship for U.S. companies in Indonesia.

Today, leading American brands are a familiar sight in Indonesia. In consumer goods, Procter & Gamble as well as Johnson & Johnson are very well positioned in the market. 3M, as a diversied product manufacturer, and Energizer, a battery-manufacturing company, own the most recognizable brands in their respective product areas within Indonesia.

U.S. manufacturing firms see promise in the country, and big-ticket extractive industry players have for decades helped build the oil and gas and mining industries. These are lasting relationships that are poised for signicant growth, but they are sometimes misunderstood and the full extent of U.S. FDI is not well known.

To grasp the full depth and benefits of U.S. FDI in Indonesia, AmCham Indonesia, the U.S. Chamber of Commerce, and the United States Agency for International Development Mission to Indonesia (USAID Indonesia) have commissioned Ernst & Young Indonesia, Paramadina Public Policy Institute, and Gajah Mada University to conduct this comprehensive analysis—the first study of its kind—of the full impact of U.S. FDI on the Indonesian economy.

The study went beyond existing data to include in-depth interviews with senior-level executives from 35 U.S. companies with direct investments in Indonesia. This included companies in the manufacturing, mining, oil and gas, retail and other sectors. We asked for qualitative input and quantitative data. We sought insight on the investment climate, corporate social responsibility (CSR) activities, challenges companies face, and issues going forward. We also received hard numbers measuring both existing and planned investments.