Indonesia posted a 41 percent rise in foreign direct investment in the first quarter of 2010

Irvan Tisnabudi & Ardian Wibisono
A base transceiver station tower in Depok, West Java. Foreign and domestic investment in communications is brisk.  (JG Photo/Jurnasyanto Sukarno)

A base transceiver station tower in Depok, West Java. Foreign and domestic investment in communications is brisk.  (JG Photo/Jurnasyanto Sukarno)
Spike in Foreign Investment in Indonesia Puts 2010 Target in Reach

Indonesia posted a 41 percent rise in foreign direct investment in the first quarter of 2010 over the same period a year ago, but domestic investment fell 30 percent, the Investment Coordinating Board said on Sunday.

The strong figure for FDI led officials and analysts to agree that 2010 could be a bumper year for investment.

The board, known as BKPM, recorded Rp 35.4 trillion ($3.92 billion) in realized FDI in the first three months, up from Rp 25 trillion in the first quarter of 2009, it said in a statement.

Gita Wirjawan, the board’s head, said notable investments by foreigners were in the transportation, warehousing and communications sector, which drew $941.5 million in funds for 23 projects. Mining attracted $711 million in 12 projects.

Singapore was the leading investor in the first quarter, with $676.8 million going to 62 projects, followed by investment from companies registered in Mauritius, a tax haven, of $446.6 million and the United States, with $436.9 million invested in 12 projects.

Meanwhile, domestic investment fell to Rp 6.7 trillion in the January-March 2010 period from Rp 8.7 trillion in the same period of 2009, the statement said, without elaborating on the decline.

The BKPM said the most active sector for domestic investment was transportation, warehousing and communications, with Rp 1.9 trillion in seven projects.

Gita said he remained optimistic that a nationwide push by the agency through the end of this month would help domestic investment rebound.

Total investment rose 25 percent in the first quarter, with more than 123,000 workers employed in 574 projects.

BKPM said the data it provided on Sunday was gathered using a new methodology. The agency has changed the frequency of its data gathering by requiring companies with projects still under development to report to the board. It also changed activity reports on current projects to every quarter, instead of every six months as previously required.

Investors who have obtained formal approval from the BKPM must also submit an Investment Activity Report every six months, instead of once a year as before, BKPM said.

“The new method is meant to increase the accuracy of the investment realization data and to understand the pace of investment,” Gita said.

He was optimistic that the board could meet or exceed its target of more than 15 percent growth in total investment this year to Rp 161.5 trillion. In 2009, total investment was Rp 135 trillion.

PT Bank Danamon Indonesia’s Helmi Arman agreed that Gita’s target was realistic.

“There is, of course, rising optimism from foreign investors on Indonesia, because ratings agencies have improved the country’s ratings due to its solid economic performance,” Helmi said.

“I think in the months to come the investment climate will be better, so in the next three quarters of this year the investment goal should be achieved, and even surpassed.”

Kagum-hotel234x343.jpg

Today Headline from JakartaGlobe.com is a service paid by First Media, a unit of Lippo Group. To Unsubscribe from thejakartaglobe.com newsletter click here.