Investment Growth in Indonesia Continues to Slow in Third Quarter 2013
The Indonesia Investment Coordinating Board (BKPM) said that total realized investments in Indonesia in the third quarter of 2013 was recorded at IDR 100.5 trillion (USD $8.89 billion). Of this total figure, IDR 67.0 trillion (USD $5.93 billion) was accounted for by foreign direct investment (FDI), while the remainder (IDR 33.5 trillion) was classified as domestic direct investment (DDI). The total investment realization of IDR 100.5 trillion was the highest ever quarterly investment figure since the BKPM releases these quarterly results.
Foreign and Domestic Investments 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 | - |
| 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 | - |
| Total Investment |
53.6 | 62.0 | 65.5 | 70.2 | 71.2 | 76.9 | 81.8 | 83.3 | 93.0 | 99.8 | 100.5 | - |
Source: Indonesia Investment Coordinating Board
However, despite the new record in Q3-2013, investments are actually showing a decelerating trend, both in terms of quarter-to-quarter (qtq) and year-on-year (yoy).
Foreign and Domestic Investments (annual percentage change)
| 2011 Quarter III |
2012 Quarter III |
2013 Quarter III |
|
| Domestic Direct Investment | 14.5% | 32.6% | 32.9% |
| Foreign Direct Investment | 15.9% | 21.7% | 18.4% |
| Total Investment |
15.5% | 24.8% | 22.9% |
Source: Indonesia Investment Coordinating Board
Head of the BKPM Mahendra Siregar said that increased DDIs were supported by the improved structure and capability of domestic companies, whether small, mid-cap or large companies. Nominally, DDIs are still small compared to FDIs because FDIs usually only involve large foreign companies with big investment projects.
Finance Minister Chatib Basri said that the increased DDIs were the result of improved economic development in the regions (outside the country's traditional industrial centers), while the slowing growth of FDIs was partly the result of the withdrawal of liquidity to home countries. This means that the importance of DDI has grown toward total investment realization in Indonesia in Q3-2013.
Based on quarterly growth, investments have shown a slowing trend since the second quarter of 2013:
Total Investment Growth (quarterly percent change)
| 2012 | 2013 | ||||||
| Q1 | Q2 | Q3 | Q4 | Q1 | Q2 | Q3 | Q4 |
| 1.4 | 8.0 | 6.3 | 1.8 | 13.6 | 7.2 | 0.7 | - |
Source: Indonesia Investment Coordinating Board
Cumulatively, the realization of investments from January to September 2013 reached IDR 293.3 trillion or 75.1 percent of the target that was set this year by the BKPM (IDR 390.3 trillion). The investment realization figure rose 27.6 percent compared to the same period last year. Of total investments (IDR 293.3 trillion) in the first nine months of 2013, about IDR 199.2 trillion was accounted for by FDIs, while the remaining IDR 94.1 trillion constituted DDIs.
Based on sector, a significant portion of DDIs (between January and September 2013) went to electricity, gas and water (21.6 percent), followed by the food industry (13.7 percent), mining (12 percent), and transportation, storage, and telecommunications (11.6 percent).
Most popular investment destinations for FDIs in the first nine months of 2013 were mining (19.1 percent), transportation equipment industry, and other transportation (13.2 percent) and basic metal industries, metal goods, machinery, and electronics (12.4 percent).
Java, Indonesia's most populous island, still forms the most popular investment destination of Indonesia in terms of geographic location. In the January-September 2013 period, 57.5 percent of total investments were conducted on Java.