Rethinking Investment

The majority of foreign direct investment in Indonesia, especially from other large Asian economies such as China, Japan and South Korea, is for projects in the power generation and mineral mining, iron and steel, infrastructure, construction, railways, highways, and automotive sectors. Most of these sectors depend on natural resource extraction, processing, and land-use change/deforestation, and the burning of fossil fuels, and as many of these projects are large in scale, such as coal-fired power plants and large hydro dams, demands a comprehensive assessment of the potential environmental and social impacts.  

As foreign investments in Indonesia are set to increase even further, it is crucial that the potential impacts, both positive and negative, are properly assessed and analysed. This assessment can then form the basis for the development of a comprehensive strategy aimed at maximizing the benefits and avoiding the negative environmental and social consequences of foreign investments in Indonesia. Foreign investment could also serve to encourage the Government of Indonesia to make further improvements to environmental and social safeguards, and to improve standards for sustainable trade and investment.