Head of the Indonesia Investment Coordinating Board (BKPM), Mahendra Siregar, is optimistic that total realized investments in Indonesia will exceed the target that is set for this year. The BKPM, a government institution, aims for investments worth of IDR 390 trillion (USD $32.5 billion) in 2013 and IDR 470 trillion (USD $39.2 billion) in 2014. Siregar is optimistic because many investors, particularly from Japan and the USA, are committed to engage in business expansion at the end of this year as well as next year.

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The Indonesian government is in the process of revising the country's Negative Investment List (the list that states which sectors of the economy are closed to foreign investment). Head of the Indonesia Investment Coordinating Board (BKPM), Mahendra Siregar, said that a number of (sub) sectors, previously closed to foreign investment, will be opened up this year. These sectors include telecommunication, financial institutions, pharmaceuticals, tourism, airport and seaport transportation services and management, healthcare, and advertising.

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Two sectors of the Indonesian economy stand out as most popular destinations of foreign investments in the first six months of 2013. These are Indonesia's manufacturing sector and the construction, property and real estate sector, which grew 46.7 percent and 100.6 percent respectively compared to the same period in 2012. Based on data of the Indonesia Investment Coordinating Board (BKPM), foreign direct investments in Indonesia increased 23 percent to USD $14.1 billion in the first semester of 2013.

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Indonesia's mining sector is still the biggest beneficiary of both domestic and foreign direct investments. Investments in Indonesia's mining sector rose 23.8 percent in the first six months of 2013 compared to the same period in 2012. This may be somewhat surprising as global economic turmoil in recent years has resulted in falling commodity prices and weak mining exports. Investments are the most important pillar of economic growth in Indonesia after the country's vibrant consumer industry.

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The Indonesia Investment Coordinating Board (BKPM) expects that investments in the second quarter of 2013 will grow by 25 percent to IDR 96.13 trillion (USD $9.6 billion) compared to Q2-2012. Although Indonesia's economic growth is under threat of slowing down to below an annual growth rate of six percent, the government agency still believes that total investments in 2013 can meet the target of IDR 390 trillion (USD $39 billion). Investments in Q1-2013 were recorded at IDR 93 trillion.

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Today, former head of the Indonesia Investment Coordinating Board (BKPM), Chatib Basri, will be installed as Indonesia's Finance minister after former Finance minister Agus Martowardojo resigned to become Governor at Indonesia's central bank (Bank Indonesia) for the period 2013 to 2018. Basri, who underwent a fit-and-proper test at the State Palace yesterday, has limited time to exercise his influence as a policy maker as President Yudhoyono's United Indonesia Cabinet II will end its term in mid-2014.

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Analysts expect that Indonesia's central bank (Bank Indonesia) will maintain its benchmark interest rate at 5.75 percent in tomorrow's meeting (14/05/13). This rate, a historic low rate for Indonesia, has been in force since February 2012. The central bank's deposit facility (Fasbi) is also expected to be kept at 4 percent. The position of Governor of Bank Indonesia - currently held by Darmin Nasution - will be taken over at the end of this month by Agus Martowardojo.

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The Investment Coordinating Board (BKPM) of Indonesia announced today that investment realization figures for domestic and foreign direct investment in the fourth quarter of 2012 increased by 18.7 percent to IDR 83.3 trillion (US $9 billion) compared to the same period in 2011 (when it was IDR 70.2 trillion). For the whole year of 2012, the cumulative of investment realization is IDR 313.2 trillion, implying that it had surpassed the government target of IDR 283.5 trillion.

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