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)