Indonesia Investment Rose Last Quarter as Volkswagen Plans Entry

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Volkswagen Tiguan cars are pictured in a production line at the plant of German carmaker Volkswagen in Wolfsburg, in this March 7, 2012 file photo. Volkswagen is seeking opportunities in Indonesia. (Reuters Photo/Fabian Bimmer)

Jakarta Globe – Indonesia’s investment rose last quarter as more companies boosted or started operations in Southeast Asia’s largest economy.

Investment climbed 30.6 percent to Rp 93 trillion ($9.6 billion) in the three months ended March 31 from a year earlier, M. Chatib Basri, chairman of the Investment Coordinating Board, said in Jakarta on Monday.

President Susilo Bambang Yudhoyono, whose second term ends in 2014, has promised to build more roads, bridges and ports in the world’s biggest archipelago to sustain one of Asia’s fastest growth rates. Demand from Indonesia’s growing middle class has lured companies including Toyota Motor Corp. to boost investments, while General Motors, Volkswagen and Apple are also seeking opportunities in the country, Basri said.

“In the last three weeks, I met investors from Japan who plan to relocate to Indonesia,” Basri said. “To improve investment, we plan to simplify licensing in the second half.”

Foreign investment climbed 27.2 percent to Rp 65.5 trillion last quarter from a year earlier, mainly supported by mining, pharmaceutical and electronic industries, the board said. Domestic investment rose 39.6 percent to Rp 27.5 trillion led by transportation, storage and telecommunications, and food, it said.

Japan was the biggest contributor to first-quarter foreign investment, accounting for $1.2 billion. Investment from the United States, South Korea and Singapore totaled $2.3 billion.

The economy expanded 6.2 percent in 2012 supported by domestic consumption and investment. Domestic consumption accounted for 63.45 percent of full-year gross domestic product and investment contributed 33.16 percent.

The agency expects total investment to reach Rp 390 trillion this year, Basri said. The country booked about $86 billion in foreign investment last year, Basri said in March.