Realized foreign and domestic investments reached Rp 50.8 trillion (US$5.64 billion) in the second quarter of 2010, a 55.8 percent increase from Rp 32.6 trillion in the same quarter, last year on the back of the improvement in the country’s investment climate.
In its quarterly report, the Investment Coordinating Board (BKPM) said the realized foreign investments during the second quarter of this year reached Rp 35.6 trillion, a 52.7 percent increase from Rp 23.3 trillion in the April-June period of last year.
Meanwhile, realized domestic investments in the second quarter rose by 63.4 percent to Rp 15.2 trillion in the second quarter, 2010 from Rp 9.3 trillion in the same quarter, 2009.
The BKPM said the realized foreign and domestic investments during the first semester of this year rose 39.9 percent to Rp 92.9 trillion. The agency expects total investments would reach Rp 160 trillion this year.
“The increase reflected the improvement in investors’ confidence in our investment climate. With this achievement, Indonesia has become a better investment destination country,” BKPM head Gita Wirjawan told a press conference Wednesday.
Apart from further improving the investment climate, the government would continue its effort to provide adequate infrastructure facilities direly needed by investors for their business expansion.
“We should continuously develop infrastructure especially highways and power plants to support investors in keeping their money in the well-protected real sector from any inflationary pressures,” he said, adding that a better connectivity would significantly reduce their cost structure.
According to the board’s report, total realized investments reached Rp 92.9 trillion in the first six months, a 39.9 percent increase from Rp 66.4 trillion in the same period of last year. About Rp 71 trillion of the total consisted of foreign investment and the remainders were domestic investments. With such an achievement, Gita believed that this year’s target to book total investments of Rp 160.1 trillion could be achieved. “We are optimistic because we have already achieved 58.1 percent of this year’s target. We are quite confident,” he said.
He said labor absorption in the second quarter reached 211,040 people, comprising 92,331 from domestic and 118,709 from foreign investments. The absorption was higher than the previous quarter’s 87,000 people, in line with the government’s development philosophy; pro job, pro growth and pro poor.
Gita said the expansion of existing companies especially those operating in mining and telecommunications made the utmost contribution to the investment increases. Manufacturers newly relocated from Vietnam and China, especially those producing footwear, electronics and textiles, also showed a significant contribution to the surge in the new investments, he added.
However, he said, the relocation of overseas manufacturers was still on a medium scale. “We should arrange industrialization on a bigger scale by providing simple investment mechanisms,” he said.
BKPM deputy head for Investment Climate Development Azhar Lubis said his institution was preparing adequate fiscal policies to spur investment, by firstly establishing a fiscal policy arrangement team involving the BKPM, the Industry Ministry and the Finance Ministry.
“We have issued a regulation on the establishment of the team,” he said, adding it would consist of Director General of Taxes, vice head of BKPM, deputy heads of BKPM, Industry Ministry secretary-general and its director generals.
Gita, Industry Mnister M.S. Hidayat and Finance Minister Agus Martowardojo will be the members of the team.
“I hope we will soon make a concrete fiscal adjustment,” Azhar said, while mentioning the team would hopefully issue such fiscal adjustment in the next one or two months to attract more investors. “This new methodology can be more accurate in detecting the investment flows by real time,” Gita said. (ebf)
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