Indonesia saw a record high level of investment realization in 2012, thanks to a 22.4 percent jump in foreign direct investment (FDI) in the fourth quarter, as the consumer-driven nation attracted overseas investors amid the economic troubles of the West.
Throughout January-December last year, Indonesia realized total investments of Rp 313.2 trillion (US$32.5 billion), surpassing its annual target of Rp 283.5 trillion, the Investment Coordinating Board (BKPM) reported on Tuesday.
FDI, which accounts for 70 percent of total investments, surged 22.4 percent in the fourth quarter, with full-year FDI increasing by 26 percent to the unprecedented level of Rp 221 trillion.
Offshore investors realized their investments mostly in the mining sector (17.3 percent of total FDI realization), followed by the transportation and telecommunication sectors (11.4 percent) and the pharmaceutical sector (11.3 percent).
Among other emerging nations, Indonesia had become the major destination for foreign investors due to its stable economic growth, BKPM chairman M. Chatib Basri said of the rationale behind the achievement.
Investors especially noticed the fact that Indonesia’s economic expansion of over 6 percent occurred during a slowdown in China, India, Brazil and Argentina, he explained.
“We are optimistic that this trend will continue,” the BKPM chairman told a press briefing on Tuesday, predicting that the country would be able to meet its yearly investment target of Rp 390 trillion in 2013.
In a recent interview with The Jakarta Post, Chatib claimed that Indonesia still had at least Rp 376 trillion in the pipeline that could be realized within a three-year timeframe. That would help BKPM to meet its yearly investment target in 2013, he said.
In the press briefing, Chatib argued that concerns regarding the recent floods or minimum-wage increases were unlikely to drag down Indonesian investment growth this year. “We are a different case compared to Thailand, whose floods hit the production hub of its industries.”
On the minimum-wage issue, he explained that it would have little impact since labor-intensive industries only accounted for 9 percent of the workforce in Indonesia.
In 2012, total investment realization contributed to 307,960 additional jobs.
Indonesia has been on the radar of overseas investors since December 2011, when Fitch Ratings upgraded the country’s sovereign credit rating to investment grade. A similar upgrade was made by Moody’s Investors Service a month later.
The only member of the so-called “Big Three” rating agencies that is yet to give the country investment-grade status is Standard & Poor’s, which has argued that Indonesia still faces “policy constraints”, especially in infrastructure development. (sat)