Indonesia Investment Reaches ‘Bottom,’ To Rise 15% in 2010: BKPM
The value of direct investment in Indonesia is predicted to rise by up to 15 percent next year after bottoming out in 2009, thanks to stable domestic economic conditions and an expected recovery elsewhere in Asia and beyond, the head of Indonesia’s main investment body said on Wednesday.
Investment Coordinating Board (BKPM) chairman Gita Wirjawan said the economies of neighboring Asian countries were likely to accelerate next year, which will have a positive effect on Indonesia.
With the country’s huge markets and natural resources, Gita said he saw no reason why total investment would shrink further from what was already a “bottom position.”
Gita said Rp 130 trillion ($13.8 billion) of total direct investment was likely to be realized this year, a 15 percent decline from Rp 154 trillion in 2008. This year’s figure would include Rp 100 trillion of foreign direct investment and Rp 30 trillion of domestic investment.
FDI is expected to fall by 24 percent this year from Rp 133 trillion in 2008.
“I expect to see around 10 to 15 percent investment growth in 2010,” Gita said. “Indonesia has strong economic fundamentals, as many ratings agencies have ranked the country positively. There will be so many opportunities for growth.”
Eric Sugandi, an economist at Standard Chartered Bank in Jakarta, said Gita’s growth forecast was realistic because the outlook for global financial institutions was good. That means banks will be increasingly willing to fund overseas investments by international firms.
But he added that there are still a number of serious impediments to growth - not least of which is the country’s power deficit.
“I agree that a large market with a positive growth outlook at 5.5 percent for next year should be attractive, but the question is can we really provide international investors with what they need? Infrastructure obstacles such as electricity shortages are still troubling for potential investors,” Eric explained.
During the first 10 months of this year, total investment in the country amounted to Rp 121.75 trillion, falling 13.8 percent from the same period last year due to the global economic crisis. FDI slumped almost 29 percent to Rp 89.28 trillion.
Domestic investment more than doubled compared with the same period last year, from Rp 32.47 trillion. Much of the increase has been put down to the effect of the government’s Rp 73.3 trillion economic stimulus package.
BKPM data excludes investment in the oil and gas sector, banking, insurance, leasing and portfolio investments.
Investment Coordinating Board (BKPM) chairman Gita Wirjawan said the economies of neighboring Asian countries were likely to accelerate next year, which will have a positive effect on Indonesia.
With the country’s huge markets and natural resources, Gita said he saw no reason why total investment would shrink further from what was already a “bottom position.”
Gita said Rp 130 trillion ($13.8 billion) of total direct investment was likely to be realized this year, a 15 percent decline from Rp 154 trillion in 2008. This year’s figure would include Rp 100 trillion of foreign direct investment and Rp 30 trillion of domestic investment.
FDI is expected to fall by 24 percent this year from Rp 133 trillion in 2008.
“I expect to see around 10 to 15 percent investment growth in 2010,” Gita said. “Indonesia has strong economic fundamentals, as many ratings agencies have ranked the country positively. There will be so many opportunities for growth.”
Eric Sugandi, an economist at Standard Chartered Bank in Jakarta, said Gita’s growth forecast was realistic because the outlook for global financial institutions was good. That means banks will be increasingly willing to fund overseas investments by international firms.
But he added that there are still a number of serious impediments to growth - not least of which is the country’s power deficit.
“I agree that a large market with a positive growth outlook at 5.5 percent for next year should be attractive, but the question is can we really provide international investors with what they need? Infrastructure obstacles such as electricity shortages are still troubling for potential investors,” Eric explained.
During the first 10 months of this year, total investment in the country amounted to Rp 121.75 trillion, falling 13.8 percent from the same period last year due to the global economic crisis. FDI slumped almost 29 percent to Rp 89.28 trillion.
Domestic investment more than doubled compared with the same period last year, from Rp 32.47 trillion. Much of the increase has been put down to the effect of the government’s Rp 73.3 trillion economic stimulus package.
BKPM data excludes investment in the oil and gas sector, banking, insurance, leasing and portfolio investments.