The European debt crisis is unlikely to stall the recent acceleration in foreign direct investment in Indonesia, the chairman of the Investment Coordinating Board chairman said on Monday.
Gita Wirjawan said he remained upbeat Indonesia could sustain healthy growth in FDI during the second quarter, after posting a 42 percent year-on-year increase in the first quarter.
â€śWhat we have seen in the second quarter is quite promising. We believe we can sustain the momentum for growth,â€ť Gita said, although he declined to offer an FDI forecast for the second quarter.
He said the debt crisis in Europe would only affect the financial markets and short-term investors, while longer-term investors in capital projects would remain focused on Indonesiaâ€™s economic fundamentals, including strong domestic demand and political stability.
The Investment Coordinating Board (BKPM) reported Rp 35.4 trillion ($3.92 billion) in realized FDI in the first quarter, up from Rp 25 trillion in the first quarter of 2009. However, domestic investment in the quarter fell to Rp 6.7 trillion from Rp 8.7 trillion during the same period a year earlier.
The sharp rise in FDI lifted total investment by 25 percent during the first quarter.
Gita said he remained optimistic that Indonesia could reach the BKPMâ€™s target of 15 percent growth in investment this year.