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Direct investment up 10% in first half, but Q3 pressure looms
The Investment Ministry reported on Tuesday that Rp 442.8 trillion (US$30.55 billion) had been invested in the country in the January to June period, nearly half of the full-year target of Rp 900 trillion.
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Investment Coordinating Board (BKPM) head Bahlil Lahadalia speaks at a virtual press briefing on Jan. 25. (Courtesy of Investment Coordinating Board (BKPM)/-)
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otal direct investment in Indonesia grew 10 percent year-on-year (yoy) in the first six months of the year, but fresh mobility restrictions are expected to put pressure on investment realization in the third quarter.
The Investment Ministry reported on Tuesday that Rp 442.8 trillion (US$30.55 billion) had been invested in the country in the January to June period, nearly half of the full-year target of Rp 900 trillion.
Foreign direct investment (FDI) contributed Rp 228.5 trillion to the figure, up 16.8 percent from 2020, while domestic direct investment contributed Rp 214.3 trillion, up 3.5 percent from the year before.
“I have to admit that in the third quarter, the challenge is huge,” Investment Minister Bahlil Lahadalia said during an online press conference, “because we are experiencing a very big increase in COVID-19 cases, the highest since COVID-19 entered Indonesia.”
The government began enforcing emergency public activity restrictions (PPKM Darurat) on July 2, and the policy, which has been modified to allow for four levels of restrictions of varying intensity, is tentatively slated to end on Aug. 2. The curbs were introduced to stem a second coronavirus wave and are expected to lower the country’s gross domestic product (GDP) growth this year.
Last year, a similar policy of large-scale social restrictions (PSBB), meant to curb the first COVID-19 wave, led to muted annual growth in total realized investment in the first half of 2020 at 1.8 percent, while FDI realization contracted.
