SoftBank has earmarked $2bn for investment in Indonesia via Grab, the south-east Asian ride-hailing start-up, in a win for the country’s president and his efforts to boost foreign direct investment into the economy.

Grab said the funds would be used to build a new transport network based on electric vehicles, develop geo-mapping services, and launch e-healthcare services in the next three months. The company will also build a second headquarters outside its Singapore base.

Monday’s announcement followed a meeting involving Joko Widodo, Indonesia’s president; Masayoshi Son, SoftBank’s billionaire founder and chief executive; Anthony Tan, Grab co-founder; and Ridzki Kramadibrata, president of Grab Indonesia.

“I’d like to invest more [in Indonesia] . . . We would invest [in] Grab more” and also encourage more investment in other companies, Mr Son told reporters.

“This investment is evidence that Indonesia has been on the radar of investors, especially in the technology sector,” added Luhut Binsar Panjaitan, Indonesia’s co-ordinating minister for maritime affairs, in a statement. 

Mr Tan said the investment was aimed at helping Indonesia — Grab’s largest market — achieve its goal of becoming the region’s largest digital economy.

Mr Widodo, who was re-elected this year, has made boosting FDI a priority for his second term. Increasing FDI is critical for Indonesia, which runs a current account deficit and last year resorted to tariffs on imports to keep it in check.

South-east Asia’s largest economy has lagged behind its neighbours in terms of FDI, with investors historically lamenting red tape and protectionism, especially in the natural resources sector. Year-on-year FDI inflows into Indonesia have dropped for four quarters in a row.

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The $2bn — which will be deployed over the course of five years and derives from the almost $3bn in capital SoftBank has already committed to Grab — would be equivalent to more than a third of realised Indonesian FDI in the first quarter of 2019. 

Mr Widodo has also made progress beyond the tech sector in luring new investment since winning his second mandate. Inpex — Japan’s largest oil exploration and production company — in June said it would develop the Abadi liquefied natural gas project in Indonesia’s Arafura Sea, an endeavour the government said will require $20bn in investment. 

Carmakers have also pledged investment in the region’s largest car market. Toyota is leading Rp50tn ($3.6bn) in investments pledged by car companies to Indonesia’s electric vehicle programme in the next five years and will spend $2bn to build hybrid vehicle plants in the country, according to Bloomberg. Toyota declined to comment.

After raising $300m from Invesco last month, Grab was valued at more than $14bn, according to people familiar with its financials.

SoftBank’s $2bn investment marks the company’s largest commitment to Indonesia, a fierce battleground for ride-hailing and home to key competitor Go-Jek. 

“Grab is an Indonesia-focused company,” said Mr Kramadibrata in a statement. “Having our second headquarters in Jakarta will allow us to better serve the needs of all Indonesians and those from emerging economies in the region.”

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