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Jakarta Post

Infrastructure development progressing as investment jumps, BKPM says

  • Dzulfiqar Fathur Rahman

    The Jakarta Post

Jakarta   /   Tue, April 28, 2020   /   01:49 pm
Infrastructure development progressing as investment jumps, BKPM says Heavy equipment is pictured at the Bekasi-Cawang-Kampung Melayu overpass construction project in Bekasi, West Java, on April 24. (JP/PJ Leo)

Projects in the warehouse, transportation and telecommunications sector have contributed the most to total realized investment this year at around 23.4 percent as of the first quarter, indicating that the government’s infrastructure development plan has shown progress, according to the Investment Coordinating Board (BKPM).

The sector had been one of the top five sectors for realized investment since 2016, the agency said, adding that its investment realization jumped 32 percent year-on-year (yoy) to Rp 49.3 trillion (US$3.1 billion) from January to March. The BKPM reported that total investment realization in the first quarter of the year rose 8 percent yoy to Rp 210.7 trillion.

The base metal, metal goods, non-machines and equipment sector booked the second-highest investment realization at Rp 24.5 trillion – 11.6 percent of the total realization figure – followed by the electricity, gas and water sector with Rp 18 trillion, housing, industrial districts and office space with Rp 17.8 trillion and crops, plantations and animal husbandry with Rp 17.2 trillion.

“The base metal, metal goods, non-machines and equipment industry is interesting,” the agency’s head, Bahlil Lahadalia, said as quoted in a statement on Tuesday. “One of the programs of the President Joko “Jokowi” Widodo administration is economic transformation by increasing added value. The large investment in the sector is a signal that the downstream sector is growing.”

Investment is the second-largest contributor to Indonesia's gross domestic product after household spending.

BKPM data shows that foreign direct investment (FDI) realization in the first quarter of the year declined 9.2 percent yoy to Rp 98 trillion as the COVID-19 pandemic hit business activity around the globe, including Indonesia. The coronavirus has had a massive impact on Indonesia’s main FDI sources, such as China, Japan, Malaysia and Singapore.

Domestic investment was the primary driver of investment realization in first quarter with a yoy increase of 29.3 percent to Rp 112.7 trillion.

Previously, Bahlil said the agency was looking to pull in Rp 886.1 trillion of investment this year. However, with the global economy taking a downturn due to the pandemic, he later said an option to lower this year's target was on the table.