The Political Risk Analysis Of China Direct Investment To Indonesia

Indonesia economic growth is fast and it is China most investment in Southeast Asia.Indonesia is one of the founding members of Southeast Asia.It is also a vast,populous country in Southeast Asia,rich in natural resources and well educated human resources.The economic development potential of Indonesia is great,both politically and economically.With its vast market resources,China has created the biggest business opportunity for developing countries,including Indonesia and is increasingly becoming the best partner.China direct investment in Indonesia is developing rapidly and the political risk of direct investment in Indonesia is increasingly becoming an important factor that enterprises have to consider.Indonesian countries have different social and economic conditions and investment environment is complicated.First,reviews from relevant theories of political risk and previous research results,summarize the definition of political risks,summarize of various classification and evaluation of political risk,and laid theoretical foundations in the study.Second,examine the development of China direct investment situation in Indonesia,then analyze manifestation of political risk by China direct investment in Indonesia,ranging from international factors,China state and China companies themselves in analyzing cause of political risk.Analyze political risk between China and Indonesia relationship with empirical analysis using World Bank data from 2007 to 2015,using regression analysis in knowing impact of China direct investment in Indonesia.Finally,the conclusions of analysis from a comprehensive and empirical theory is Indonesia political risk is derived from changes in political,economic,culture and other aspect or Indonesia political instability and policy uncertainty,Indonesia political risk level every increase 1%,China direct investment in Indonesia will drop 6.42%.ultimately having suggestions and solving problem from the government and enterprises perspective is China government has capacity and obligation to assume more responsibility in the international community,bilateral relations and domestic efforts,and cooperation between Indonesia and China.In addition,Companies can strengthen communication and contact with industry associations,industry associations are familiar with the relevant laws and regulations,and with local government and other institutions to provide useful experience and information,but also can help enterprises to safeguards legitimate rights and interests.