Tue, 22 Jul 2008
Realized direct investment in Indonesia grew 56.2% in the year's first half compared to the same period last year, with robust foreign investments offsetting a domestic decline, the Investment Coordinating Board (BKPM) said, quoted by The Jakarta Post.

"Realized investment in the first half of the year reached $11.32 billion from $7.25 billion in the same period last year," said BKPM chairman Muhammad Lutfi.

Foreign investment in the period reached $10.3 billion, a 153.2% increase from $4.1 billion a year earlier, countering a 70% decrease in domestic investment to $940 million from $3.15 trillion.

"The drop (in domestic investment) was a result of the fuel price increases, and also because many domestic investors teamed up with foreign investors to open or restart businesses," Lutfi said. He said the domestic investment slowdown would continue toward the end of the year as investors continued to adjust to increased fuel prices, but he was optimistic the situation would improve in 2009.

The government increased domestic fuel prices in May by 28.7% on average to cap a ballooning fuel subsidy amid high global crude oil prices.

Lutfi said the telecommunications sector received the bulk of the foreign investment in the first half of the year, followed by the electronic, transportation and trade and services sectors.

Domestic investors primarily injected funds into food-related sectors, as well as electronics, trade and services and pulp and paper sectors.



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