Sun, 28 Dec 2008
Jakarta, (ANTARA News) - Economic observer from the Institute for Development of Economics and Finance (Indef), Aviliani, predicts direct investment in Indonesia in 2009 will drop due to political conditions in the year.

"The direct investment growth will be withheld as foreign investors are waiting to see the results of the 2009 general elections. Investors will also see prospects of business certainty next year," she said to ANTARA here on Friday.

She said 2009 would be a political year for Indonesia because in April next year the country would conduct legislative elections and in September a presidential election which would then be followed by cabinet formation.

Before the head of the Capital Investment Coordinating Board, Muhammad Lutfi, said he predicted investment would only grow around 10.7 to 11.2 percent next year or lower than 15 percent as predicted by the government for this year.

Although it would drop the growth would still be double digit, she said adding that current global economic crisis had started affecting a number of countries.

Aviliani said the impact of the crisis would be felt in the second quarter next year, causing an investment slowdown in the real sector.

She said the short-term target of investment in the real sector would be difficult to achieve. Investment, if there is any, would be likely long-term and mainly in natural resource-based or infrastructural sectors where return would not be dependable on temporary unheavals.

Similarly portfolio investment is predicted to remain depressed in line with a negative sentiement caused by the drop in the domestic stock markets and the exchange rate of the country`s currency in the last six months.

"In the long term portfolio investment is promising but in the short-term it is difficult to expect because investors are still traumatized by equity market upheaval in the capital market," she said.

In general, Aviliani, investment development in the country in 2008 still remained good compared to that in other countries. But in 2009, she said, investment would only be driven by infrastructure projects and projects financed by the national budget.

"Investment would only rely on infrastructure development including carry-over projects from 2008," she said.

To make the infrastructure sector maximal in promoting investment growth in the country the government needs to work hard particularly in the settlement of land acquisition, she said.

"Land acquisition is one of the factors that is difficult to settle causing tens of projects to be delayed," she said.

She said, meanwhile, that if all government infrastructure projects could be finished according to schedules it was certain that economy in the regions where the projects were located would be moved and employment was created to promote growth.

She said political situation in the country in 2008 was generally good compared to that in other countries.

"According to a number of investors the situation in 2008 was quite good for investment. This must be maintained in 2009 and political upheavals must be prevented so that investment interest is increasing and the negative impact of the global crisis could be overcome," she said. (*)



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