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Global uncertainties, red tape to impede foreign investment plans: Experts
Analysts have pointed out that Indonesia’s regulatory inconsistency has also dissuaded foreign investment.
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A field officer monitors a heavy equipment that carries out coal open pit mining activity at PT Bukit Asam’s mining site.
(Courtesy of/www.ptba.co.id)
I
nvestors from Japan to the Middle East have pledged to invest billions of US dollars in infrastructure projects, car battery plants and nickel smelters, but experts are pessimistic about whether these investment plans can be realized this year given the bleak outlook of the global and domestic economies.
Coordinating Maritime and Investment Minister Luhut Pandjaitan told reporters on Dec. 10 that US$137 billion worth of investment was in the pipeline for infrastructure projects across Indonesia. Yet, the gloomy outlook of the global economy caused by Brexit and the United States-China trade war and bureaucratic red tape presents could impede the investment plans.
According to the Office of the Coordinating and Investment Minister, most of the investments are slated for oil and petrochemical refinery projects (46 percent) and mineral processing facilities (34 percent), both of which are part of the government’s goal to build domestic downstream industries.
Luhut noted that, among other investments in the two categories were those of the United Arab Emirates in three oil refineries and Japan in a $2.8 billion nickel smelter. Remaining investments were intended for transportation (8 percent), infrastructure (5 percent), tourism (1 percent), plantations (1 percent) and other sectors (5 percent).
Going forward, Luhut said his office was eyeing German and South Korean companies to build battery factories in either West Java or Central Sulawesi. He was also hoping for American and Japanese financiers to develop a gigantic 9,000 megawatt (MW) Kayan hydropower plant in North Kalimantan (the 1,000 MW Cirata plant in West Java is currently Indonesia’s largest).
However, as World bank data shows, Indonesia’s gross domestic product (GDP) growth could slow to 4.9 percent next year and slide further to 4.6 percent in 2022 amid intensifying uncertainty, most notably from Brexit and the US-China trade war, resolutions of which have been extended.
