Indonesia is optimistic that it will be able to attract more investment this year despite the implementation of simultaneous legislative and presidential elections to be held on April 17, 2019. Based on observation over the past 15 years, the government has found out that investment usually slows down before elections.
Thomas Trikasih Lembong, head of the Investment Coordinating Board (BKPM), has expressed optimism that investment would rebound after the April elections, owing to high market expectation on stability and continuity.
"It will rebound. (The 2019) election will be held on April 17, and we still have 7.5 months after the voting day for the investment sector to recover from the pre-election slowdown," Lembong said during a discussion with foreign investors.
The agency has set a target of investment at Rp792.3 trillion (US$56 billion) in 2019, higher than Rp721.3 trillion ($51 billion) in 2018. The target has covered 55 percent of foreign investment and 45 percent of domestic investment. In 2018, the realization of investment in Indonesia reached Rp712.3 trillion, accounting for 94.3 percent of the target of Rp765 trillion in the medium-term national development plan.
"In the fiscal year 2018, we failed to achieve the target, because the investment only reached 94.3 percent of the target," Lembong stated on Jan 30, 2019.
Compared to the previous year, the investment in 2018 rose 4.1 percent, with domestic investment amounting to Rp328.6 trillion and foreign investment amounting to Rp392.7 trillion. The investment mostly went to West Java, Jakarta, Central Java, Banten, and East Java. The domestic investment represented a 25.3 percent increase compared to the previous year. However, the foreign investment in 2018 fell 8.8 percent compared to a year earlier.
The five largest foreign investors in Indonesia are Singapore ($9.2 billion, 31.4 percent); Japan ($4.9 billion, 16.7 percent); China ($2.4 billion, 8.2 percent); Hong Kong ($2.0 billion, 6.8 percent); and Malaysia ($1.8 billion, 6.2 percent).
In the fourth quarter of 2018, the realization of investment contributed Rp185.9 trillion, or 25.8 percent of the overall investment throughout 2018.
In the October-December 2018 quarter, the realization of domestic investment reached Rp86.9 trillion, up 28.6 percent of Rp67.6 trillion in the same period of 2017, and the realization of foreign investment totaled Rp99.0 trillion, down 11.6 percent from Rp112 trillion in the same period the year before.
BKPM acting deputy for investment control Farah Ratnadewi Indriani stated that the realization of investment in the fourth quarter of 2018 created 255,239 jobs. Cumulatively, the number of jobs created last year reached 960,052.
The agency issued 1,239 business registration numbers (NIB) per day during the period of January 2-11, 2019.
The numbers were issued by the agency`s new unit called Online Single Submission (OSS) service, which has been in operation since early January.
An average of 1,239 business registration numbers were issued daily during the period, with a total of 8,895 NIB of domestic investment, 541 NIB of small and medium scale enterprises (SMEs), and 486 NIB of foreign investment.
The numbers was issued by the agency`s new unit called Online Single Submission (OSS) service, which has been in operation since early January this year.
Initially, the OSS service came under the coordinating minister for economic affairs since July 2018, but the BKPM took over the task on January 2, 2019.
Meanwhile, investments in the manufacture industry in 2018 reached Rp222.3 trillion. The largest domestic investment was recorded by the food industry at Rp39.1 trillion, followed by the chemical and pharmaceutical industry at Rp13.3 trillion.
The largest foreign investment went to the basic metal, metal and non-machinery industry at $2.2 billion, followed by the chemical and pharmaceutical industry ($1.9 billion), and the food industry ($1.3 billion).
Industry Minister Airlangga Hartarto shared his optimism over increasing investments in the manufacturing industry in 2019, as some international industries have expressed their commitment to invest in the country.
"Some investors who already operate in Indonesia have expressed their wish to expand (their business). This was one outcome of our recent meeting during the World Economic Forum in Davos," Hartarto said in a statement recently.
Meanwhile, Indonesia`s International Investment Position (IIP) was relatively stable in the third quarter of 2018.
Indonesia`s IIP at the end of the third quarter of 2018 recorded a net liability of $297.0 billion, or 28.5 percent of the gross domestic product, relatively unchanged from that at the end of the previous quarter, according to a statement from BI here recently.
Investors` confidence has shown that Indonesia is still considered a potential country for manufacturing and production for both the domestic and export markets. (ant)