Investment Realization in Indonesia USD $19.8 billion in Semester I-2013

Finance minister - and former head of the BKPM - Chatib Basri noticed a remarkable trend (that is visible in the table below). Annual growth of FDIs has slowed down in the first six months of 2013, while DDIs have jumped in the same period.

Foreign and Domestic Investments (in IDR trillion)

	2011 Semester I	2012 Semester I	2013 Semester I
Domestic Direct Investment	33.0	40.5	60.6
Foreign Direct Investment	82.6	107.6	132.2
Total Investment	115.6	148.1	192.8

Foreign and Domestic Investments (annual percentage change)

	2011 Semester I	2012 Semester I	2013 Semester I
Domestic Direct Investment	50.7%	22.7%	49.6%
Foreign Direct Investment	16.3%	30.2%	22.8%
Total Investment	24.4%	28.1%	30.2%

^{Source: Indonesia Investment Coordinating Board}

"FDIs have begun to slow down. This is the result of high economic growth. Domestic investors' share towards total investments has grown at the expense of foreign investments' percentage share," said Chatib Basri.

Slowing FDIs have been discernible since last year. Although in absolute terms its value has increased, its movement is rather slow. This development is in contrast with DDIs, where the increase has been rapid:

Foreign and Domestic Investment Realization (in IDR trillion)

	Quarter I      2012	Quarter II      2012	Quarter III       2012	Quarter IV       2012	Quarter I      2013	Quarter II      2013
DDI	19.7	20.8	25.2	26.5	27.5	33.1
FDI	51.5	56.1	56.6	56.8	65.6	66.7

Chatib Basri also said that domestic investments usually grow after foreign investments have increased. This development is because of new industries that develop around a foreign industry. For example, after a foreign investor opens an automotive factory, domestic investors will open spare parts industries. As such, new industries evolve around a foreign investment. This shows the importance of foreign investments.

However, despite the positive trend, there are some concerns regarding investments in Indonesia. One is the uneven distribution pattern of investments in terms of geography. According to the data supplied by the BKPM, investments on the island of Java (Indonesia's most populous island) have increased at the expense of the other islands. The explanation behind this is that investments outside Java are more focused on natural resources and commodities. Thus, when commodity prices weaken, investment realization outside Java will fall accordingly. Investments in Java are more focused on the manufacturing (particularly the automotive sector) and consumer industries. As these industries have grown sharply, so do investments on Java.

Geographical Investment Realization Semester I-2013

Island	Investment   (in IDR trillion)	Percentage Share
Java	109.5	56.8%
Sumatra	27.1	14.1%
Kalimantan	25.5	13.2%
Moluccas and Papua	14.8	7.6%
Sulawesi	10.3	5.4%
Bali and Nusa Tenggara	5.6	2.9%

Chatib Basri reminded that investments in Semester II-2013 will face challenges, both domestic and foreign challenges. Reduced liquidity in a number of countries (for example the possible end of America's quantitative easing program) will be felt in Indonesia. Domestically, higher interest rates and inflation will make an impact on investment realization. This impact was not felt in Semester I-2013.

Another change is visible in the source of investments. Previously, Singapore was the largest foreign investor in Indonesia. However, its leading position has now been taken-over by Japan:

	Investment    (in USD billion)
Japan	2.3
Singapore	1.9
USA	1.3
South Korea	1.2
England	0.6

^{Source: Indonesia Investment Coordinating Board}

‹ Kembali ke Kolom Berita

Bahas

Silakan login atau berlangganan untuk mengomentari kolom ini