Ellipse Projects, EU and the UK: Foreign Direct Investment puts Indonesia on track for Covid-recovery

Image: Widodo via Flickr.

Indonesia has seen a sharp uptick in Foreign Direct Investment (FDI) to the tune of 14% in the first three months of 2021. FDI in the country now stands at 111.7 trillion rupiah ($7.72 billion) which is an almost 5% increase on last year’s figures. In fact, Indonesia is one of the new emerging powers in Southeast Asia, with PwC, predicting it will become the world’s fourth-largest economy in 2050, behind China, India, and the US. According to the World Bank, the country experienced a GDP growth rate of 5% in 2019, with a domestic market of over 270 million people, 70 million of whom are middle class.

But this is by no means the first time foreign investors have taken notice of the Indonesian archipelago. The growth-oriented President Joko Widodo’s government has been pursuing a policy of economic openness and deregulation since his election in 2014. The 2020 Omnibus Law made investing in the country even easier by spelling out a list of encouraged investments. While China remains among the top five investors in the country, Indonesia has nonetheless managed to maintain what one political commentator has called “dynamic balancing” of geopolitical powers on its books.

Ellipse Projects and the national television network

As one of the world’s largest archipelagic countries – with two-thirds of its surface covered by water, 95,000 kilometres of coastline and over 17,000 different islands – digital expansion can be difficult. In 2014, the Indonesian government sought outside help to renovate its analogue terrestrial television broadcasting infrastructure. French company Ellipse Projects eventually won the tender for a concessional loan from the French Ministry of Economy and Finance. Ellipse Projects fought off stiff competition from Germany and Japan to take home the contract with KOMINFO, the Indonesian Ministry of Communications and Information Technology, for €48 million.

As the prime contractor, Ellipse Projects envisioned a rehaul of the nation’s television network, consisting in the renovation and replacement of antenna infrastructure, followed by the provision of television transmitters across 60 sites. The turnkey deployment was completed by mid-2017. The foreign investment constituted a crucial step in the digitalisation of Indonesia’s TV transmission network in line with International Telecommunication Union (ITU) standards. Following the successful completion of this previous investment by Ellipse Projects, President Joko Widodo has acknowledged the benefits of promoting Western financing into Indonesia’s infrastructures.

The UK and the EU want in on Indonesia

Ellipse Projects’ Indonesian success story rubbed off on Brussels, who have been progressively strengthening bilateral relations with the country ever since. From 2018 to 2023, a €10 million EU programme entitled ‘ARISE Plus’ has been providing technical support to ASEAN countries through economic integration. The EU is currently in the process of ratifying the Indonesia–EU Comprehensive Economic Partnership Agreement (IEU-CEPA), which was delayed by Covid-19 but will bolster the results achieved though ARISE and enable a specific focus on Indonesia in the near future.

The UK, for whom Indonesia is a post-Brexit priority, is jostling for a foothold alongside the EU. In 2020, they upped investments in the country by 35%. Then, in April this year Westminster signed a Memorandum of Understanding (MoU) on the Joint Economic and Trade Committee (JETCO) between Indonesia’s Minister of Trade and the UK Secretary of State for International Trade in April. The government has since earmarked £4 billion in competitive long-term government financing aimed at catalysing the development initiatives in Indonesia. Since the UK now operates outside of EU rules they will be in a good position to compete on trade tariffs, and more targeted measures in the country’s digital sector – from e-commerce to technological innovation – and the renewable energy sector to reverse the country’s reliance on coal.

Indonesia’s recent success in securing foreign investment is a positive sign that international confidence in the country’s economy is growing. The chief of investment board BKPM, Bahlil Lahadalia, opined that the recent inflows of FDI demonstrate “the trust the world has for Indonesia” and that “foreign investors’ activities have begun to normalise and adapt with the development of the Covid-19 pandemic.” Early investments such as Ellipse Projects’ television restructuring have helped Indonesia get recognised as a good environment for foreign investors, and will help the country recover quickly from the impact of Covid-19.