News Room - Business/Economics

Posted on 25 Feb 2009

Investment jumps 61% in January (Indonesia)

The global financial crisis has yet to derail flows of investment  into Indonesia, as foreign investment in January jumped by 61 percent from a year earlier.

 

Foreign direct investment (FDI) in the first month of the year reached US$710 million, far more than the $440 million recorded in the same period in 2007, as shown by data from the Investment Coordination Board (BKPM).

 

“In the face of the global economic crisis, BKPM will continue to attract FDIs by continuing to reducing bureaucratic constraints, while modernizing and simplifying investment processes,” BKPM chairman Muhammad Lutfi told reporters on Tuesday, commenting on these encouraging figures.

 

On the domestic front, the figure is equally encouraging. Actual domestic investment rose by 33.3 percent to Rp 0.76 trillion from a year earlier at Rp 0.57 trillion.

 

In total, realized investment increased by 57.8 percent to Rp 7.15 trillion up from Rp 4.53 trillion in the same period last year.

 

“In the long run, domestic investment growth may outgrow FDI,” Lutfi said, referring to the gloomy regional economic outlook.

 

“Last year FDI growth was around 40 percent, but this year it may drop to around 20 percent, while domestic growth will be higher than FDI in the full-year,” said Lutfi.

 

In January, the rubber and plastics industry recorded the highest domestic investment value of Rp 300 billion.

 

Meanwhile, the construction sector recorded the highest FDI value of $384.6 million with three projects, followed by the trading sector at $74.4 million with 27 projects.

 

By region, West Java topped the list for the highest domestic direct investment destination at Rp 573.1 billion with five projects, while Jakarta topped the list for inward FDI with an investment value of $296.1 million  for 33 projects.

 

By country of origin, investors from South Korea invested the biggest amount at $205 million with 18 projects, followed by the Seychelles with $156.3 million with one project, while the UK was third on the list with $119.9 million in relation to  five projects.

 

According to BKPM, FDI and domestic investment combined created jobs for more 23.000 workers.

 

“There are no countries in this world which can withstand the global economic crisis normally, but I believe our national economy deals with the crisis better than most,” Lutfi said.

 

BKPM will focus on investments in three sectors — agriculture, infrastructure, and energy — to address the issue of a potential slowdown in investments this year, Lutfi added.

 

BKPM projected that investment, both domestic and foreign, would grow by 10.7 to 11.2 percent this year, although still representing a decline on the 20.5 percent growth in 2008.

 

BKPM recorded that Indonesia secured last year Rp 20.36 trillion ($1.69 billion) in achieved domestic investment and $14.87 billion in realized foreign investment.

 

The realized domestic investment represented a 41.6 percent drop from a year earlier, while foreign investment represented a 43.8 percent rise.

 

With exports already hit by the impact of the global economic slowdown reducing demand, Indonesia would still need a boost in domestic consumption and investment to achieve a targeted 4.5 percent growth, as stated under the revision to the 2009 state budget which is currently under deliberation at the House of Representatives.