Chinese FDI reshaping Indonesia's logistics market

Foreign Direct Investment (FDI) in Indonesia surged 19% year-on-year to USD 60 billion by the end of 2024. This reinforces Indonesia's position as one of the key investment destinations in Southeast Asia, offering advantages that continue to attract international investors and occupiers. With a population exceeding 280 million, the country's economy is dominated by the industrial sector (including manufacturing and construction). It's vibrant digital economy, valued at USD 90 billion, further enhances its appeal.

Over the past five years, Indonesia has consistently received extensive investment from China. Chinese FDI increased from USD 0.6 billion in 2015 to USD 8.2 billion in 2022 and remained relatively stable at USD 8.1 billion in 2024, representing growth of 1,306% over the decade. Since 2020, Chinese investment in Indonesia has expanded and diversified, with a notable concentration in the Electric Vehicle (EV) ecosystem. Major corporations such as BYD, CATL, Foxconn, Gotion, and Wuling have committed to make investments in Indonesia. Trade figures further illustrate the relationship between the two countries. In March 2025, China remained Indonesia's primary export destination, accounting for 23.84% of total exports, with the United States (12.06%) and India (6.47%) following behind.

Figure 1: China’s Foreign Direct Investment (FDI) volume to Indonesia from 2015 to 2024

Source: National Single Window for Investment (NSWI) Ministry of Investment Coordinating Board (BKPM), 2024

Chinese companies across multiple sectors, including EVs, battery manufacturing, Original Equipment Manufacturers (OEMs), automobiles, semiconductors, electronics technology, household appliances, metallurgy, textiles, and fast-moving consumer goods (FMCGs) are actively seeking ready-to-lease facilities. During the first quarter of 2025, warehouse space inquiries were predominantly driven by the EV ecosystem and its supply chain partners, who typically present specialised facility requirements. This trend reflects the growing Chinese investment in this industry.

Some Chinese companies view Indonesia as a relocation hub from other markets. Others are exploring land acquisition for building their own manufacturing facility, or pursuing build-to-suit projects with sell or lease options. This has created demand for hybrid spaces accommodating both storage and light manufacturing. Despite limited availability, demand persists for large, flexible, ready-to-use facilities. Chinese investors initially sought rental, ready-to-use factories, but have pivoted toward modified modern warehouses due to limited inventory. This investment pattern corresponds with the "China-plus-one" diversification approach, as Chinese manufacturers establish a presence across Southeast Asia. Within Indonesia, the eastern corridor of Jakarta, specifically Cikarang, Karawang, Subang, and Semarang, has emerged as the preferred location for Chinese industrial investment. With Chinese companies being key drivers, supported by healthy demand, the Greater Jakarta modern logistics warehouse market demonstrated resilience. Occupancy rates are currently improving to 90%.

Figure 2: Modern logistics warehouse occupancy rate in Greater Jakarta

Source: JLL Indonesia, 1Q25

The logistics property sector outlook remains positive heading into the rest of 2025, underpinned by several factors such as Indonesia's manufacturing sector and sustained foreign investment, particularly from Chinese enterprises. With strategic government policies promoting industrial development and infrastructure improvements enhancing connectivity across Greater Jakarta's eastern corridor, the medium-term prospects for logistics property development remain favourable. Beyond Chinese investors, local and international investors continue to actively pursue opportunities across multiple property sectors. These include not only industrial and manufacturing but also commercial, hospitality, and residential, as well as alternative sectors such as data centers, healthcare, and education. We anticipate further FDI opportunities as Chinese manufacturers continue to diversify their production strategy.