Tue, 30 Nov 2010

From: The Jakarta Globe

By Shirley Christie
Jakarta. India’s foreign direct investment may surge to $5 billion in the next three to five years as its companies invest in coal production and power plants in Indonesia.

“The investment value could reach about $5 billion,” Gita Wirjawan, head of the Investment Coordinating Board (BKPM), said on the sidelines of the European Union-Indonesia Business Dialog on Monday.

“After meeting with Indian businesses last week, they stated their interests to invest, especially in coal, smelters and power plants.”

He said more than 12 Indian companies have expressed interest in these ventures but declined to name the firms.

Most of the companies were also interested in developing value-added products in Indonesia, he said.

In August, Indian-controlled Adani Global agreed to invest $1.6 billion in the construction of a 270-kilometer railway to transport coal in South Sumatra, where it operated a mine.

Analysts welcomed the news, saying Indonesia needed more foreign investment to fund long-term infrastructure projects.

But Yanuar Rizky, a market analyst, said Indian companies were eyeing foreign coal and power supplies to conserve energy stocks in their country.

“This is not necessarily a good move viewed from an Indonesian perspective,’’ he said, since it would use up Indonesian resources.

Yanuar said the state needed to encourage Indian firms to invest in projects that would create jobs.

Indonesia is trying to attract billions of dollars in investments to improve its infrastructure as part of efforts to sustain long-term economic growth.

In the first nine months of this year, foreign direct investment in Indonesia was at Rp 111 trillion ($12.3 billion), 32 percent higher than the same period last year, BKPM data showed.

Indonesia’s economy is forecast to expand by 6.1 percent this year from 4.5 percent last year. The economy expanded 5.8 percent in the third quarter this year from a year earlier.