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Jakarta Post

‘I have a vision’: New BKPM boss wants domestic investment to overtake foreign investment

  • Riza Roidila Mufti
    Riza Roidila Mufti

    The Jakarta Post

Jakarta   /   Fri, November 1, 2019   /   08:13 am
‘I have a vision’: New BKPM boss wants domestic investment to overtake foreign investment Investment Coordinating Board (BKPM) head Bahlil Lahadalia talks to the press on Thursday. (JP/Riza Roidila Mufti)

The new Investment Coordinating Board (BKPM) chairman, Bahlil Lahadalia, has shared his vision that domestic investors should overtake foreign investors, as Indonesia booked a 12.3 percent growth in realized investment in the January-September period of this year from the same period last year, led by gains in domestic investment.

Throughout this year up to September, overall realized investment reached Rp 601.3 trillion, a 12.3 percent increase from the nine-month period ending last year, the BKPM announced Thursday. Domestic investment grew 17.3 percent to Rp 283.5 trillion while foreign direct investment (FDI) rose 8.2 percent year-on-year to Rp 317.8 trillion.

The gap between foreign and domestic investment this year up to September looks narrow at Rp 34.3 trillion but historically, looking at 2014 to 2016 annual data, the discrepancy between the two sources of investment has been wide, reaching Rp 140 trillion to Rp 190 trillion per year, BKPM data show.

“We still expect FDI to remain big, but I have a vision that domestic investment must be stronger and much more than FDI,” Bahlil, a former chairman of the Association of Young Indonesian Businesspeople (HIPMI), told reporters on Thursday.

Investment is a top priority for President Joko “Jokowi” Widodo to jack up Indonesia’s economic growth, which declined to the lowest level in two years in the second quarter of this year, as trade weakens amid the ongoing trade war-driven global economic slowdown.

Investment realization from January to September represents 75.9 percent of the BKPM’s overall target this year to net Rp 792 trillion in realized investments from both domestic and foreign investors.

In terms of the origin of FDI so far this year until September, Singapore tops the list with a 25 percent share, or $5.4 billion in investment, followed by China and Japan with $3.3 billion (15.6 percent) and $3.2 billion (15.1 percent) respectively. The Netherlands and Hong Kong were the fourth- and fifth-biggest foreign investors in Indonesia.

“The most interesting thing is if we look at investment distribution, it is spread evenly and doesn't only focus on Java Island. This means that investment prospects outside Java are beginning to be more promising as a result of the infrastructure development that has been pursued in the last few years,” said Bahlil. In the January-September period, investment outside Java accounted for 45.1 percent of the overall investment value.

Looking at the business sectors, 18.5 percent of the overall realized investment in the first nine months of this year went to transportation, warehouse and telecommunications, followed by 16 percent to electricity, gas and water, 8 percent to construction, 7.9 percent to housing, industrial zones and offices and 7.4 percent to mining.