Government Targets Major Foreign Investment for IKN by 2024
The government is targeting a massive influx of investment for the Nusantara Capital (IKN) megaproject before President Joko Widodo’s term ends in October 2024. This affirmation comes alongside efforts to expedite the completion of basic infrastructure and supporting facilities in East Kalimantan on Tuesday (15/08/2023).
Deputy for Investment Cooperation at the Ministry of Investment/BKPM, Riyatno, revealed that several investors from Singapore, Malaysia, to China have shown strong interest. Citing Investortrust, the government is also facilitating direct site visits in Penajam Paser Utara and Kutai Kartanegara to convince these prospective investors.
“There are already investors from Singapore and Malaysia interested in investing in IKN, as well as many from China, and we are facilitating direct site visits to IKN (in parts of Penajam Paser Utara Regency and parts of Kutai Kartanegara Regency, East Kalimantan Province). This is to make it more convincing. The first-phase investments are more towards property and its supporters, linked to IKN which will become a new environmentally friendly capital. In the latest meeting, discussions also covered more conducive foreign ownership, opening up opportunities for foreign investors, so that foreigners are interested in entering our property sector,” said Riyatno, Deputy for Investment Cooperation at the Ministry of Investment/BKPM.
The development of IKN is designed to adopt the concept of a nature-based smart city with an electric-powered transportation system. Riyatno added that the Ministry of Investment has a special mandate to promote this project to businesses in Southeast Asia through an exhibition forum in September.
“The Ministry of Investment/BKPM is also tasked with handling the ASEAN forum exhibition plans, one of which is for IKN. This allows direct communication with ASEAN business players (related to the 43rd ASEAN Summit series on 5-7 September 2023),” explained Riyatno, Deputy for Investment Cooperation at the Ministry of Investment/BKPM.
The funding needs for IKN development up to 2024 are estimated at Rp 466 trillion to Rp 486 trillion. The allocation of these funds comes from the State Revenue and Expenditure Budget (APBN) at 19%, while the remaining 81% or around Rp 393.66 trillion is expected to come from private sector investments.
On the other hand, Head of Research Team & Strategist at Mirae Asset, Robertus Hardy, predicts that economic growth will also be driven by the cement, automotive, and telecommunications sectors. Increased post-pandemic societal mobility is believed to be the main driver strengthening the Composite Stock Price Index (IHSG) towards the 7,600 level.
“The cement, automotive, and telecommunications sectors will drive the IHSG to 7,600 by the end of the year (from the 15 August 2023 position at 6,915),” said Robertus Hardy, Head of Research Team & Strategist at Mirae Asset.
The research team assesses that these selected sectors have the potential for returns exceeding the general index growth. Purchases of motor vehicles and building materials sales volumes are predicted to increase significantly along with the recovery of household consumption in the second semester of this year.
“All three sectors have the potential for higher returns than the IHSG, which is currently still burdened by the commodities sector. In our view, societal mobility, mainly, will drive car and motorcycle purchases,” stated Robertus Hardy, Head of Research Team & Strategist at Mirae Asset.
Head of Business Innovation at Mirae Asset, Wisnu Aditya, emphasised the importance of information access for investors to boost confidence in transacting in the capital market. This aligns with the company’s vision to facilitate investment access for all levels of society through an integrated platform.
“Not only research, but also stock recommendations from experts, economic data, technical analysis, fundamental stock screener, news, forums, media centre, and selected stocks are available; there’s a one-stop solution for Indonesian capital market investors and traders like FIMA,” said Wisnu Aditya, Head of Business Innovation at Mirae Asset.
The company’s operational stability is also affirmed by management through reports of net working capital value. The company’s current financial position is claimed to far exceed the minimum threshold set by Indonesia’s financial services regulator.
“The adjusted net working capital value (MKBD) also shows the health of the company’s operations and is one of the largest. Mirae Asset’s MKBD remains stable at around Rp 1.3 trillion in the last 6 months and Rp 1.4 trillion in the last year. These figures are far above the minimum provisions set by regulations and legislation for securities companies, namely Rp 25 billion, along with other provisions,” said Ivonne Kaharu, Head of Corporate Secretary at PT Mirae Asset Sekuritas Indonesia.