Foreign direct investment hits record high

Posted on April 25, 2012


Tue, 04/24/2012


Realized foreign investment (FDI) in Indonesia reached its highest-ever level for a first quarter, Rp 51.5 trillion (US$5.7 billion), up 30 percent over the same period in 2011, according to an official.

Investment Coordinating Board (BKPM) chairman Gita Wirjawan said on Monday that the realized FDI, which he said would create 250,000 new jobs, defied the drops typically seen in the first quarter.

The BKPM, which records and administers investment outside the oil and gas and financial sectors, was confident Indonesia would reach an investment target of Rp 283.5 trillion by the end of the year, or a 13 percent increase over 2011, according to Gita.

Gita, who is also the trade minister, attributed the growth to a surging number of Japanese and South Korean companies investing in Southeast Asia’s largest economy.

Among the realized projects by South Korean companies is a steel plant in Cilegon, Banten, built by Posco Steel Corp. and state-owned steel producer PT Krakatau Steel.

The plant has an anticipated investment of $6 billion over five years, with the first phase of construction scheduled for completion in November 2013.

Another project involving Korean investment is a $300 million joint venture between state-run gas company Pertamina Gas and Samtan Co. Ltd. to process liquefied petroleum gas (LPG) in South Sumatra.

Gita also cited Hankook, the world’s seventh-largest tire maker, which built a $353 million factory in Lippo Cikarang in Bekasi, West Java.

The project has a total anticipated investment of $1.1 billion over three years.

Singapore remained the largest source of FDI for Indonesia in the first quarter with $1.2 billion, followed by Japan with $600 million and South Korea with $500 million, after it joined the top-five investors for the first time last year.

Most FDI was channeled into the mining sector with $1.1 billion, the transportation, storage and telecommunications sectors with $800 million, and $500 million in the food crops and plantation sectors.

The investment projects were also more evenly distributed throughout Indonesia than previously, with realized investment outside Java increasing to 47.2 percent of total investment, up from 44.2 percent in the same period in 2011.

“With the acceleration of infrastructure development, including the electricity and gas supply, we are certain that investment projects will be more evenly distributed in the future,” Gita said.

Despite the record-breaking numbers for FDI, Gita said that the BKPM would not change its investment targets.

“We can’t afford to be too complacent. There are still many anxieties outside Indonesia that might hamper investment growth in Indonesia,” Gita said, citing potential risks such as inflation and an unfavorable regulatory environment as potential impediments. (han)

Posted in: EKONOMI