Indonesia has reported a 17.6 per cent increase in both domestic and foreign realized investments in the first quarter this year at Rp 146.5 trillion ($11 billion), or almost 25 per cent of the full year target of Rp 595 trillion. The realization has helped create 327,170 new jobs, according to chairman of Indonesian Coordinating Board of Investments (BKPM) Franky Sibarani.
China, the largest economy in the world, has become Indonesia’s fourth top investor with realized investments of $500 million – up 400 per cent from the same period last year.
Franky Sibarani indicated that China will continue to boost its partnership with Indonesia. A large portion of recorded investments from Chinese companies are taken up by smelter projects, such as Well Harvest Mining and Morowali project, with the latter expected to be commissioned in May or June.
“China has shown tremendous growth in investments in Indonesia, while many countries in the European Union are in a decreasing trend. This is why the president’s presence in approaching foreign investors is extremely important,” said Sibarani in Jakarta.
Indonesia has continued to display warmer relationship with China since President Joko ‘Jokowi’ Widodo rose to power in 2014. Early this year, the president led the groundbreaking ceremony for Indonesia’s first bullet train that will be built by PT Kereta Cepat Indonesia China (KCIC) – a joint venture between China Railway International and an Indonesian consortium of four state-owned firms.
China Development Bank, the Chinese state lender, is providing three-quarters of the funding for the Indonesia rail project on generous terms and with no guarantee required from the Indonesian government. The controversial train, however, has been halted after critics pointed out that the project was too costly and unfair.
Indonesia still relies heavily on foreign direct investments (FDI), which makes up about Rp 96.1 trillion or 65.5 per cent of the total first quarter’s realized investments. Singapore remains the country’s largest contributor with $2.9 billion worth of investments, followed by Japan ($1.6 billion), Hong Kong ($0.5 billion), China ($0.5 billion) and Netherlands ($0.3 billion).
Furthermore, Sibrani said, the proportion of realized investment outside Java showed a positive trend. In the first quarter this year, the actual investment outside Java island reached Rp 65.8 trillion or 44.9 per cent of the total investment, up from 43.9% in the same period last year.
“This shows that the government’s drive to encourage more investment to outside Java island has begun to show positive results,” he said.
Report from BKPM also revealed that manufacturing sector is leading the portion of direct investments, with about Rp 111.4 trillion or 69.2 per cent. Trade and tourism sector follows in the second position with Rp 30.4 trillion or 20.8 per cent, while prime sector recorded Rp 14.7 trillion or about 10 per cent of total direct investments.