Indonesia Investment Coordinating Board Optimistic on Investment in 2014

Siregar in fact stressed that the legislative and presidential elections in 2014 have a positive influence on the country’s economy and investments although he did not substantiate this statement. On the contrary, a recent survey of the Deutsche Bank showed that the majority of respondents (consisting of foreign investors) will sell Indonesian assets in case Prabowo Subianto is elected as Indonesia’s next president. Subianto, former army general and former son-in-law to Indonesia's second president Suharto, has the topics of resource nationalism and independence from foreign influences high on his political agenda. Although other presidential candidate and market favourite Joko ‘Jokowi’ Widodo still leads the Indonesian popularity polls, Subianto is not far behind which makes foreign investors a bit concerned.

Regarding foreign direct investment, Siregar said that he hopes to see more ‘quality investments’ referring to investments that result in added value products (downstream industries) and which are labor-intensive (as the Indonesian unemployment rate needs to be pushed down). Siregar admitted that in order to attract quality investments, the Indonesian government needs to show consistent and good governance as well as improve the country’s infrastructure to make the investment climate more attractive.

Although the Indonesian government, central bank and various international institutions (such as the World Bank and IMF) have downgraded Indonesia’s economic growth in 2014, the BKPM has not revised down its target for investments this year.

Foreign and Domestic Investment in Indonesia (in IDR trillion)

	2014
	Q1	Q2	Q3	Q4
Domestic Direct Investment	34.6
Foreign Direct Investment	72.0
Total Investment	106.6

Foreign and Domestic Investment in Indonesia (in IDR trillion)

	2011				2012				2013
	Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4
Domestic Direct Investment	14.1	18.9	19.0	24.0	19.7	20.8	25.2	27.5	27.5	33.1	33.5	34.1
Foreign Direct Investment	39.5	43.1	46.5	46.2	51.5	56.1	56.6	65.5	65.5	66.7	67.0	71.2
Total Investment	53.6	62.0	65.5	70.2	71.2	76.9	81.8	83.3	93.0	99.8	100.5	105.3

^{Source: Indonesia Investment Coordinating Board (BKPM)}

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