Indonesia Expects Slower Growth in Direct Investment This Year:

Official

Direct investment in Indonesian firms from foreign and domestic sources
is expected to grow more slowly this year, the country's investment
board chief said on Tuesday (23/08), noting that Southeast Asia's
largest economy had lost out to Vietnam in the regional competition to
attract funds.

Thomas Lembong, chief of the Investment Coordinating Board (BKPM), said
total direct investment from both foreign and local investors will
likely grow 12-14 percent annually in 2016, excluding investment in
banking, oil and gas sectors. That compares with 17.8 percent growth in
such investment in 2015.

Last year, foreign direct investment into Indonesia was $29.3 billion,
while locals invested Rp 179.5 trillion ($13.6 billion), according to
the board's data. The sectors that received the most funds were
transportation, telecommunications, electric power and mining.

"We have to admit there is a regional trend where Vietnam ... has worked
hard in the past 8 to 9 years to be an investment magnet and it is
reaping the results now. Indonesia must catch up," Lembong told a press
conference at the palace, after a limited cabinet meeting with President
Joko Widodo.

The economy posted its strongest growth in two and a half years in the
second quarter, at 5.18 percent. But the government announced a $10
billion spending cut this month, that forced the central bank on Friday
to trim its growth forecast this year to 4.9-5.3 percent.

Widodo, whose five year term ends in 2019, has prioritized improving
Indonesia's investment climate. He has already streamlined some
regulations and opened up dozens of sectors to foreign funds in a move
that he described as a "big bang" liberalization.

To get more investors this year, Indonesia will review and drop more
regulations that have hindered investment, said Cabinet Secretary
Pramono Anung.

Jakarta will also monitor and improve the efficiency of permit handling
in 10 provinces where Indonesia received the most investment, Lembong added.