2012 Investment Realization in Indonesia May Top $31 Billion, a Record

fdi indonesia
Foreign direct investment in Indonesia, which is estimated to have hit US$21 billion in 2011, is expected to reach $31 billion in 2012 as the country draws in multinationals keen to set up base in a market that offers long-term potential. (Bloomberg Photo).

Jakarta Globe-ID/Ridho Syukra

Indonesia is expected to have received more than Rp 300 trillion ($31 billion) in investment realization last year, higher than the targeted Rp 283 trillion, said an official from the National Investment Coordinating Board (BKPM).

Azhar Lubis, the deputy of investment implementation control at BKPM, said that Indonesia is estimated to have recorded around Rp 80 trillion in investment realization locally and from abroad in the fourth quarter alone, bringing the total amount to a Rp 308 trillion for 2012.

That would be a record amount. The government hopes that investment realization will increase further this year, hitting Rp 390 trillion.

“Hopefully this projection is right, because if it is right then it will add more vigor in BKPM’s attempt to meet the 2013 target of Rp 390 trillion,” he said last week.

BKPM has yet to release the official figure of investment realization for the fourth quarter. Investment realization had amounted to Rp 228 trillion in the January-September period, Azhar said.

“Our investment climate is growing and expanding which can be seen in its large contribution [to gross domestic product] after domestic consumption,” he said.

Domestic consumption, typically, is the highest contributor to the economy, accounting for about two thirds of Indonesia’s GDP. Investment comes second, contributing around 30 percent of GDP.

Azhar said that one of the factors that led to an increase in investment is the BKPM’s introduciton of the online tracking system, which allows prospective investors to track their application via the Internet.

“They [the investors] said that the tracking system is a good system, they feel comfortable in submitting investment application as it no longer consumes a lot of time,” he added.

Investment has been rising quickly in Indonesia, especially after the country regained its investment grade ratings from Moody’s a year ago and from Fitch in December 2011. Foreign companies such as Toyota Motor of Japan have pledged billions of dollars in investment, trying to take advantage of the growth in middle-income households among Indonesia’s population of 240 million people.

Low borrowing costs have encouraged consumers to take out loans for spending.