FDI in January fell by 24 percent: BKPM
The Jakarta Post, Jakarta
Foreign direct investment (FDI) flows into the country remained weak as FDI approvals in January of this year dropped by nearly 24 percent compared to the same period last year, according to the latest data from the Investment Coordinating Board (BKPM).
BKPM said on Monday that FDI approvals during the month fell to US$264.4 million from $324.2 million.
It said that the number of projects plunged by 50 percent to 49 projects from 99 projects.
The agency data was quoted by detik.com as saying that domestic investment activities were also weak as the number of approved projects fell to seven from 13 in January of last year, although the total investment slightly increased to Rp 1.044 trillion (124.28 million) from Rp 1.033 trillion.
During the past few years, the investment flow into the country has been slowing due to a combination of global uncertainty and problems at home including legal uncertainty, security problems, labor conflict, and poor implementation of the regional autonomy law. The strong attraction of China and other neighboring countries offering cheaper labor and stable political conditions have even prompted some investors to shift their business operations.
The hard gained macroeconomic stability as reflected in the strengthening of the rupiah, benign inflation and falling interest rates have not translated into stronger investment activities.
Some analysts have said that most investors would likely to stay on the sidelines this year due to the upcoming seven-month election period.
The weak investment flow has affected the country's economy which has been growing at a meager rate of less than 4 percent during the past couple of years as growth has been largely driven by domestic consumption while exports and investments remained slow.
Economists have said that the economy needs to return to its pre-crisis growth level of between 6 percent and 7 percent in order to be able to provide enough jobs for the millions of unemployed.
Elsewhere, BKPM said that the food sector had attracted the most attention from foreign investors during the month of January, followed by the construction, and chemical and pharmacy industries.
Banten Province was the most favored investment place attracting some $101.7 million in approved FDI. In second place was Gorontalo, which saw an FDI figure of $85.5 million. The densely populated West Java province was in third place with FDI figure of $21.2 million.
England was the largest source of the FDI in January, followed by Brazil and Japan.