Business Cost NewsPart 4 News: General Business EnvironmentWorld

FDI Make a Smashing Return to Indonesia

Bahlil Lahadahlia, the head of Investment Coordinating Board (BKPM), speaks in a seminar in Surabaya, East Java on March 18, 2021. (Antara Photo/Zabur Karuru)


APRIL 27, 2021


Jakarta. The foreign direct investments into Indonesia has grown rapidly first quarter this year, reflecting investors’ confidence in Indonesia’s structural reform as global investments activities start to recover from the Covid-19 pandemic slump.

The FDI rose 14 percent to Rp 111.7 trillion ($7.7 billion) in the January to March period from the same period last year, following a 5.5 percent rise in the previous quarter, data from Investment Coordinating Board (BKPM) showed on Monday. That was the fastest year-on-year, first-quarter growth pace in the past five years.

The BKPM data exclude investment in oil and gas and banking and financial sectors.

“Despite the Covid-19 pandemic, the investment realization, especially FDI, has started to stabilize,” BKPM Head Bahlil Lahadahlia said in a press conference on Monday.

The foreigners accounted for 50.8 percent of the total investment in the first quarter, retaking the pole position after local investors making up for more than half of total investments during the pandemic last year.

“This showed the level of trust in Indonesia and reflected the foreign investment activities that have begun rolling again by adapting to the Covid-19 development in our country,” Bahlil said.

Singapore and China remained among the top sources of investment. South Korea surged to the third top source of FDI thanks to automaker Hyundai Motor’s investment electric vehicles factory. Switzerland jumped up the ranks to fifth place from 23rd in the previous quarter, thanks to influxes of investment in the food and beverages industry.

In fact, the food and beverage industry attracted more than $968 million of investment last year, second only to the metal industry, which attracted $1.7 billion in investment, BKPM data showed. The transportation, warehouse, and telecommunication sector came in third place with $843 million investments, followed by utilities at $599 million.


Stalled Projects

Bahlil also said BKPM also managed to resolve issues surrounding Rp 708 trillion worth of foreign investments that have stalled in the past few years, allowing some of the investments to make progress.

About 73 percent of the stalled projects had shown progress, “in term of permits, land [clearing] processes, et cetera,” Bahlil said.

President Joko “Jokowi” Widodo tasked Bahlil to unravel the complications in the investment process regarding “sectoral arrogance” or poorly coordinated bureaucratic structures, overlapping regulations, and land clearing conflicts.

“Those are the big homework that the President wants us to resolve,” Bahlil said.

Apart from that, Bahlil said there were investments with tax breaks from the government worth Rp 1.000 trillion in total, which progresses slowly. Bahlil said that BKPM would focus on resolving these company’s problems next.

Domestic Direct Investment

Indonesia saw domestic direct investment dropped 4.2 percent to Rp 108 trillion in the first quarter, from the same period last year.

Despite that, the surge in FDI was enough to bump up total investment to Rp 219.7 trillion, up 4.3 percent from a year ago.

Bahlil said Jokowi wanted this year’s investment to reach Rp 900 trillion, up from Rp 826.3 trillion last year.