With proper government regulations, foreign firms can be guided to transfer the domestic businesses technical know-how, managerial and organizational skills and provide access to foreign markets.
World Bank studies also concluded that FDI improves labor conditions, setting global industry standards and delivering infrastructure to local communities.
FDI can benefit domestic firms, mainly through linkages and demonstration channels: Linkages between foreign firms and local partners or suppliers can enhance the transmission of foreign firms' technology, knowledge and requirements that may help domestic suppliers upgrade their technical and quality standards.
The demonstration effect, in which domestic firms imitate foreign technologies and managerial practices either through observation or by hiring workers trained by foreign companies, is another key channel that benefits companies in host countries.
Just look at how Indonesian bankers who moved from foreign to local banks have contributed greatly to good governance in the banking industry. However, problem still there, despite significant developments in diplomatic ties in the post-Suharto era, China–Indonesia relations are still marked by the two countries’ acrimonious history and questions about the loyalty of Chinese Indonesians. Indonesia’s relations with China are consequently vulnerable to politicization. Jokowi also banks his performance on the success of his infrastructure programs and it is likely that his rivals will try to find fault in his claims of success.
(source: East Asia/The Strait Times)