For­eign in­vest­ment in In­done­sia rises

The Pak Banker - - BUSINESS -

For­eign di­rect in­vest­ment in In­done­sia picked up last quar­ter, a sign Pres­i­dent Joko Wi­dodo's re­forms may be start­ing to in­crease in­ter­est in South­east Asia's largest econ­omy.

In­vest­ment from over­seas rose to $7.9 bil­lion in three months through De­cem­ber, up 7 per­cent from the pre­vi­ous quar­ter, the In­vest­ment Co­or­di­nat­ing Board said in Jakarta on Thurs­day. It rose 3 per­cent in 2015 to $29.3 bil­lion, af­ter stag­nat­ing in 2014.

Stung into ac­tion by a de­cline in the ru­piah, slump­ing de­mand for the coun­try's com­modi­ties and the slow­est eco­nomic growth since 2009, Wi­dodo, known as Jokowi, reshuf­fled his cab­i­net in Au­gust and be­gan a se­ries of re­forms aimed at mak­ing it eas­ier to do busi­ness. While those mea­sures have im­proved sen­ti­ment, fix­ing the red tape, cor­rup­tion and lack of le­gal cer­tainty that have long put off in­vestors will prob­a­bly take time.

"There is pos­i­tive move­ment but you can't ex­pect things to hap­pen overnight," said Vishnu Swa­roop Baldwa, pres­i­dent di­rec­tor of PT Indo-Rama Syn­thet­ics, a tex­tile com­pany that has in­vested $350 mil­lion in In­done­sia over the last five years. "The political will is there and I think the bu­reau­cracy is fol­low­ing that, but there is a lot more which can be done," he said ear­lier this month. In­done­sia aims to com­plete by March a re­vi­sion of its rules that reg­u­late which in­dus­tries for­eign­ers can in­vest in. That is ex­pected to in­clude al­low­ing 100 per­cent for­eign in­vest­ment in the film in­dus­try, restau­rants and large e-com­merce sites, while main­tain­ing re­stric­tions in in­dus­tries such as bank­ing, ac­cord­ing to re­cent com­ments by the in­vest­ment board.

The data re­leased Thurs­day doesn't in­clude in­vest­ment in the oil, gas and bank­ing sec­tors. Oil and gas in­vest­ment was $13.6 bil­lion in the first 10 months of 2015, short of the govern­ment's full-year tar­get of $23.7 bil­lion, ac­cord­ing to en­ergy min­istry data. In ru­piah terms, us­ing an ex­change rate of 12,500 a dol­lar, for­eign in­vest­ment rose 19.2 per­cent last year. To­tal in­vest­ment, in­clud­ing from do­mes­tic sources, rose 17.8 per­cent to 545.4 tril­lion ru­piah, beat­ing the board's tar­get. The govern­ment is op­ti­mistic it can achieve to­tal in­vest­ment of 594.8 tril­lion ru­piah this year, said Franky Sibarani, chair­man of the agency known as BKPM.

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