Jakarta. Indonesia and Malaysia have agreed to boost investment ties, as the former attempts to make its downstream industries -- which aims to reduce exports of unprocessed minerals -- more attractive in the eyes of foreign investors.

Investment Minister Bahlil Lahadalia inked the memorandum of understanding (MoU) on promoting investment with his Malaysian counterpart Tengku Zahrul Aziz on Thursday during President Joko “Jokowi” Widodo’s trip to the neighboring country. 

According to Bahlil, competition for investment related to green energy and downstream industries will get more intense in the future. However, Indonesia views Malaysia as the "best friend" who shares many traits and is willing to establish a mutually beneficial investment partnership. The freshly inked MoU is expected to enhance Indonesia’s competitiveness as an investment destination —in the aforementioned sectors— compared to other ASEAN countries.

“[Malaysia] is not selfish, so I will closely partner with Malaysia. Moving forward, the two countries will enhance investment through more intensive and targeted promotion efforts, while also improving the climate investment in both Indonesia and Malaysia,” Bahlil was quoted as saying in a recent press statement.

“Particularly on priority sectors such as industrial downstream, renewable energy, and sustainable investment,” he added.

The government reported that Malaysia invested $10.1 billion in Indonesia in 2017-2022. This placed Malaysia as Indonesia’s seventh-largest foreign investor. 

Malaysian investment mostly went to transport, telecommunication and warehouses, the chemical and pharmaceutical industry, the food industry, food crops, plantation, farming, as well as paper and printing industries. Malaysia’s investment in Indonesia also rose from $1.4 billion in 2021 to $3.3 billion a year later.

Indonesia is working on developing its downstream industries, meaning that they would process the raw materials at home for added value. 

A government roadmap shows that Indonesia plans to develop the downstream industries of 21 commodities across eight priority sectors. Building the downstream industries across these sectors, which include minerals and fisheries, would require $545.3 billion in investment by 2040. 

These commodities include nickel, bauxite, and seaweed, among others. Indonesia has stopped exporting unprocessed nickel ores to boost its downstream industry. The bauxite ore export ban will come into effect tomorrow.

Read More: Looming Bauxite Export Ban Not Well-Thought-Out: Think Tank