Indonesia overseas investment hits $6.37 billion

Indonesia overseas investment hits $6.37 billion

JAKARTA (JP): Indonesia's direct overseas investment reached a
total of US$6.37 billion in June, only slightly lower than the
$7.15 billion in direct foreign investment recorded in the same
month, Bank Indonesia reported on Wednesday.

Bank Indonesia deputy governor Achjar Iljas said that although
the investment made by Indonesian residents overseas appeared to
be high, capital flow still recorded a surplus.

"This is a surplus, which means that capital inflow was
greater than capital outflow," Achjar told a news conference
announcing the result of the central bank's new regulation
requiring banks to report forex transactions to the bank.

Bank Indonesia imposed the ruling, which became effective in
June following a trial phase from March to May, in order to
compile better statistics for the monitoring of forex outflows
and inflows in the country as well as for the purpose of creating
a credible monetary policy.

But Achjar said that in terms of portfolio investment in both
the money and capital markets, the outflow was greater than the
inflow.

"The portfolio investment flow, which usually tends to
fluctuate, showed a deficit in June," he said, adding that the
net result was minus $494.1 million.

Achjar said that export revenue received via domestic foreign
exchange banks in June was $2.59 billion compared to outflow used
for imports of $2.65 billion.

He said that the export revenue excluded revenue from oil and
gas exports because such transactions were not recorded by the
banks.

He said that net foreign exchange flows for the payment of or
revenue from services was $353.8 million.

But he added that the data excluded transactions made via Bank
Indonesia, including payments of the interest on the government's
foreign debts.

Achjar said the central bank was not yet ready to disclose the
data concerning the short-term forex flows or financial accounts,
which may reflect the size of forex speculation made via the
banks.

He said Bank Indonesia had the data but it had to be discussed
first with the central bank's working group to reach a clear
conclusion.

"But the turnover (of the financial accounts) in June was
huge," he said.

"This doesn't necessarily mean there has been massive forex
speculation. We have to listen to the banks first to allow them
to justify the transactions," he added.

Elsewhere, Achjar said that as of June, all of the country's
131 foreign exchange banks had complied with the new ruling and
submitted their forex transaction reports by the deadline at the
end of the month.

He said that for each day of delay in submitting the report,
the banks would be given a penalty of Rp 5 million.

He added that a penalty of Rp 100 million would be imposed on
banks which failed to submit their reports two months after the
deadline, and that the banks might risk closure if they failed to
submit reports for six consecutive months.

"I think the penalty system has been effective so far," Achjar
said.

According to Achjar, the sanctions for making mistakes in the
reports would only be imposed from January next year.

"The banks still need more time for adjustment," he said.

He also said that the central bank had yet to impose a similar
ruling on forex transactions made via non-bank institutions.

"We plan to impose it this year after talking to the related
associations." (rei)