Sustainable Development Impacts of Investment Incentives: A Case Study of the Chemical Industry in Indonesia

The document evaluates the effectiveness of investment incentives for Indonesia's chemical sector, finding that market size is a more significant driver of investment than incentives. While the industry provides some infrastructure and indirect jobs, direct local employment is limited by education levels, and the sector remains the country's primary polluter, though foreign firms often show better environmental performance than domestic ones.

• Investment incentives were not the primary driver for chemical companies choosing to invest in Indonesia; instead, the size of the Indonesian market was more influential, although investors valued incentives like reduced import duties for cost reduction.
• The chemical industry in Indonesia generates fewer employment opportunities compared to the textiles, metal, machinery, and electronics sectors, and its reliance on imported technologies and inputs limits backward linkages to the broader economy.
• While the chemical industry is Indonesia's main polluter, foreign companies in Banten province generally exhibit better environmental performance than domestic companies, and local residents consider air and noise pollution to be within tolerable limits.

APA

Wijaya,, S. A. L. I. R. S. (2009). Sustainable Development Impacts of Investment Incentives: A Case Study of the Chemical Industry in Indonesia. International Institute for Sustainable Development. https://www.iisd.org/publications/report/sustainable-development-impacts-investment-incentives-case-study-chemical

Chicago

Wijaya,, Sri Adiningsih,Murti Lestari,A. Ika Rahutami,Awang Susatya. Sustainable Development Impacts of Investment Incentives: A Case Study of the Chemical Industry in Indonesia. International Institute for Sustainable Development, 2009. https://www.iisd.org/publications/report/sustainable-development-impacts-investment-incentives-case-study-chemical.

Wikipedia

{{cite report |last1=Wijaya, |first1=Sri Adiningsih,Murti Lestari,A. Ika Rahutami,Awang Susatya |title=Sustainable Development Impacts of Investment Incentives: A Case Study of the Chemical Industry in Indonesia |publisher=International Institute for Sustainable Development |date=1 April 2009 |url=https://www.iisd.org/publications/report/sustainable-development-impacts-investment-incentives-case-study-chemical |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{wijaya2009sustainable, author = {Wijaya,, Sri Adiningsih,Murti Lestari,A. Ika Rahutami,Awang Susatya}, title = {{Sustainable Development Impacts of Investment Incentives: A Case Study of the Chemical Industry in Indonesia}}, institution = {International Institute for Sustainable Development}, year = {2009}, month = apr, url = {https://www.iisd.org/publications/report/sustainable-development-impacts-investment-incentives-case-study-chemical}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }