The Regional Investment Coordinating Board said that Aceh (Sumatra), known for its strong Islamic identity, expects to receive IDR 5 trillion (USD $438.6 million) in foreign and domestic investment in 2014. In the first quarter of 2014, Indonesia’s western-most province already saw IDR 2 trillion (USD $175.4 million) worth of investments. Aceh, a resource-rich province (in particular oil and natural gas), is one of the more mysterious Indonesian provinces and has had to deal with considerable negative publicity throughout its modern history.
This negative publicity involved a number of subjects. Firstly, the Free Aceh Movement (GAM). This was a separatist group seeking independence for Aceh. Heavy fights between the Indonesian army and the GAM resulted in more than 15,000 casualties between 1976 and 2005 (when the province received the special autonomy status). There were frequent reports about human rights violations conducted by the Indonesian army between those years in Aceh fueling resentment toward the central government. Secondly, and which is partly responsible for the peace agreement between the central government and the GAM in 2005, the 2004 tsunami (Aceh was the closest point of land to the epicenter). More than 130,000 Indonesians, mostly in Aceh, died due to the impact of this tsunami. Thirdly, there has been concern about the partial implementation of Shariah (Islamic law), especially concerning reports that it is also enforced on non-Muslims. Lastly, ahead of Indonesia’s legislative election (on 9 April 2014), a series of fatal shootings – probably politically motivated – took place. However, the local authorities claim that despite these incidents, security and safety in Aceh is not less than in other Indonesian provinces.
As such, it is important for the Aceh province to try to rebrand itself in order to foster further foreign confidence and investments. Developing the local tourism sector is regarded as a first appropriate step. The Regional Investment Coordinating Board also said that Aceh will focus on agriculture and infrastructure development as well as reducing bureaucracy to smoothen investments.
Total investment in Indonesia grew 27 percent (year-on-year) to IDR 398.6 trillion (USD $35 billion) in 2013 but about 57 percent of these total investments were realized on Java, Indonesia’s most populous island.
This year, total investments in Indonesia are expected to grow 15 percent.
According to data from the Indonesia Investment Coordinating Board (BKPM), foreign direct investment in Aceh stood at USD $94.2 million in 2013, USD $172.3 million in 2012, USD $22.5 million in 2011 and USD $4.6 million in 2010. These figures indicate that investment in Aceh has grown considerably in recent years.