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Europe, Middle-East among regions poised to offset decreasing investments from China

The possible decrease of investments from China would contrast with last year’s achievement, when foreign direct investment from the country grew almost twofold to $4.7 billion from the $2.4 billion in 2018, according to the BKPM.

Made Anthony Iswara (The Jakarta Post)
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Jakarta
Tue, March 10, 2020

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 Europe, Middle-East among regions poised to offset decreasing investments from China Business permit applicants wait at the BKPM One-Stop Integrated Service Office in Jakarta. (JP/Ricky Yudhistira)

T

he Investment Coordinating Board (BKPM) is setting its sights on alternative sources of foreign direct investments (FDI) because it expects the COVID-19 outbreak is about to cause a sharp decline in the flow of investments from China, Indonesia’s second-largest foreign investor.

BKPM head Bahlil Lahadalia said the agency was still calculating the investment realization figures for the first quarter, which would be announced in April. Nevertheless, he named Europe, the Middle East, South Korea, Japan and Singapore as some potential FDI sources to cushion the potential decrease from China.

“We shouldn’t be too pessimistic in the midst of the coronavirus. We will find markets in other countries,” Bahlil told reporters after a press conference in Jakarta on March 6.

The BKPM wrote in a press statement on Thursday that the coronavirus has caused a decline in transactions, especially those related to the trade of materials from countries with widespread infections, such as China and South Korea.

China’s possible investment decline would contrast with last year’s achievement, when FDI from China grew almost twofold to $4.7 billion from the $2.4 billion in 2018, according to the BKPM. China was the second-largest foreign investor in Indonesia during that period.

An overall decrease in investments – the second largest contributor to GDP growth – could cast a larger shadow on the country’s sluggish economic outlook for 2020. Indonesia’s economy grew 5.02 percent annually in 2019, the weakest since 2015, Statistics Indonesia (BPS) showed.

In its October 2019 World Economic Outlook, the International Monetary Fund estimated Indonesia’s GDP would grow 5.1 percent in 2020, but many analysts say they believe the decline in China’s economic growth because of the coronavirus outbreak would further drag down Indonesia’s economic growth.

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