Tue, 07 Jul 2009
From: The Jakarta Globe
By Muhamad Al Azhari & Dian Arrifahmi
Foreign direct investment realization in the first half of this year rose 20 percent to $5.3 billion from $4.4 billion in the second half of 2008, thanks to large investment in the telecommunications sector, the Investment Coordinating Board announced on Monday.

Muhammad Lutfi, chairman of the board also known as BKPM, told reporters the telecommunications sector was contributing 65 percent of the FDI figure in the first half period “because there was an investment by Natrindo [a cellular operator] of as much as $1.1 billion.”

Media has reported that PT Natrindo Telepon Seluler was preparing to spend $1 billion on network expansion and marketing, with its aim of reaching nationwide coverage by the end of 2009.

Natrindo is 51 percent owned by Saudi Telecommunications, with Malaysia’s Maxis having a 44 percent stake and the rest belonging to local investors, according to Dow Jones newswire.

FDI realization in the first half fell 19 percent from the year-earlier period.According to the Jakarta Globe’s calculations based on Lutfi’s comment to Reuters last July, FDI in the first half of last year stood at $6.56 billion. BPKM did not publish complete monthly investment data on its Web site.

As for realization of combined FDI and domestic investment in the first half of 2009, it was recorded at $7.3 billion, Lufti said. Domestic investors reportedly invested Rp 1.9 trillion ($186 million) in the period.

“For this [first half], total investment rose 27.2 percent compared with the second half of a year ago,” Lutfi said, adding that he was expecting that the figure would increase after the presidential election.

Lutfi said last week that for this year, he remained optimistic that the realized direct investment would grow about 10 percent from last year.

Indonesia’s recorded total actual direct investment - domestic and foreign - of Rp 154 trillion in 2008, is 20 percent higher than in 2007, according to the BPKM Web site.

Lufti’s prediction, however, was met with skepticism by Juniman, an economist from PT Bank Internasional Indonesia.

Juniman said Indonesia was likely to record only about 5 percent to 7 percent growth in total actual investment this year because the global credit crisis has yet to ease.

“For both domestic and foreign investors, they are likely to still face difficulty borrowing funds from the financial markets or banks as the global crisis has had a bad impact on these sectors,” Juniman said, adding that uncertainty over who will lead the country was also another reason to put investment plans on hold.

Juniman also predicted that Indonesia would likely only realize about $10 billion in FDI this year, down from $14.87 billion for the whole year in 2008.

Earlier, Finance Minister Sri Mulyani Indrawati forecast that realized FDI flows into the country for 2009 could be as low as $6.2 billion as companies remained cautious about expansion plans amid the global downturn.

The Finance Ministry calculated it forecast based on reviewing patterns of investment from the BPKM during the past two years.

Based on the country of origin of foreign investment, Netherlands was the largest, followed by Singapore and South Korea.



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