Indonesia's Q3-2017 Foreign & Domestic Direct Investment Rise
Indonesia's Investment Coordinating Board (BKPM) announced that total direct investment in Indonesia (foreign + domestic investment) reached IDR 176.6 trillion (approx. USD $13.2 billion using the IDR 13,400 per US dollar exchange rate as set in the revised 2017 state budget) in the third quarter of 2017, up 13.7 percent year-on-year (y/y) from the same quarter one year earlier.
Cumulatively, total direct investment in Indonesia reached IDR 513.2 trillion (approx. USD $38.3 billion) in January-September 2017, up 13.2 percent from total investment in the same period one year ago. Roughly 57 percent of investment realization went to the island of Java (while the government is actually trying to make direct investment realization more balanced between Java and the other islands in an effort to boost equality among the regions).
As usual, foreign direct investment (FDI) contributed most to total investment in Indonesia. In Q3-2017, FDI reached IDR 111.7 trillion (approx. USD $8.4 billion), up 12.0 percent on a year-on-year basis and accelerating from a 10.6 percent (y/y) growth pace set in the preceding quarter.
Most of FDI realization in Q3-2017 went to the metal, machinery and electronics industry as well as mining (FDI excludes investment in the following sectors: oil & gas, banking, non-bank financial institutions, insurance, leasing, and home industry). Singapore was the biggest source of investment in Indonesia in Q3-2017, followed by Japan and China.
Thomas Trikasih Lembong, Head of BKPM, said he believes Indonesia's digital economy is increasingly attracting FDI. Examples of foreign investors in this industry are Alibaba, Tencent Holdings and JC.com Inc. Lembong added that the economic transformation from consumption to investment has started to kick off. The central government is eager to boost investment, hence somewhat reducing the role of domestic consumption in the country's economic composition.
Most of domestic direct investment (DDI) in Q3-2017 went to (1) the electricity, gas, and water supply, and (2) real estate, industrial estate and office buildings. DDI reached IDR 64.9 trillion (approx. USD $4.8 billion) in Q3-2017, up 16.8 percent (y/y) from the same quarter one year ago.