Go Greener: Central Java’s Efforts to Attract Sustainable Investment

Jateng Investment

Magelang, August, 21-22 2023 – Central Java aims to attract green investment of up to IDR 65 trillion by 2023 (based on data from the Ministry of Investment /Investment Coordinating Board, BPKPM) to encourage sustainable economic growth and to achieve the target of net zero emissions (NZE). For that, green investment must prioritize environmental friendliness and commit to educating the local workforce, transferring technology, and carrying out products downstream. Additionally, sustainable aspects must be considered when preparing green investment projects.

In line with efforts to increase the regional sustainable economy, the Provincial Government of Central Java, through the One-Stop Investment and Services Agency (DPMPTSP), collaborated with Bank Indonesia Representatives for Central Java Province to organize the Central Java Investment Business Forum (CJIBF), 2023. The forum was designed to foster collaboration between the government, Bank Indonesia, and business actors to increase investment growth and promote sustainable economic development in Central Java. The CJIBF allowed investors to invest in the region, resulting in an investment interest of IDR 18.5 trillion.

Ganjar Pranowo, Governor of Central Java, said the realization of green investment does not only focus on investment but also needs to build an investment ecosystem both at the community and regional government levels. If the investment ecosystem is established effectively, the government must support it by facilitating licensing and services, providing incentives such as prioritized services, commitment, compliance, and enhancing human resources or a skilled workforce in the Central Java regions.

“The Provincial Government of Central Java has a significant initiative to improve human resources and encourage green investment. One of their plans is to construct vocational or vocational high schools and establish special departments focusing on renewable energy,” said Ganjar Pranowo.

Ganjar emphasized the importance of aligning the needs of workers in the business and industrial sectors with the curriculum and learning in vocational high schools. This would require a concerted effort by the government to ensure that the local workforce is trained according to the specific requirements of companies, enabling them to remain competitive.

On the other hand, the Expert Staff for Macroeconomics at the Ministry of Investment/Investment Coordinating Board (BKPM), Imam Soejoedi, mentioned that Central Java Province is a highly favorable location for investment. The CJIBF event aims to strengthen Central Java’s investment opportunities and economic competitiveness, leading to sustainable economic growth.

Imam believes investors see investment in Central Java (Central Java) as more effective and efficient. Central Java also has a low incremental capital-output ratio (ICOR); this indicates that the lower the ICOR, the more efficient investment will be. The success of investment in Central Java is also supported by investors’ trust in the local government.

“Numerous investors have invested in Central Java, which houses the largest glass factory in Southeast Asia, the Nestle industry, the battery industry in Batang, and the food industry in Kendal. Trust plays a crucial role in investment. Even if the location is exceptional, if investors lack trust in the central and regional governments, they may relocate to other provinces or regions,” said Imam.

Meanwhile, Hendri Saparini, Founder and Senior Economist at CORE Indonesia, said Central Java should prepare to compete in green and sustainable investment on both national and international levels. The shift towards green investment should be matched with education and fostering an investment ecosystem at the community and local government levels to ensure sustainability and global impact.

“Central Java requires a green roadmap, which the district/city legislature should back. Additionally, it is crucial to strongly commit to incentivizing companies and investors to advance green investments in Central Java. This will help to attract investors and make investing in Central Java more accessible,” explained Hendri Saparini.