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Q3 foreign investment down 2.7% amid Delta outbreak
The outbreak compelled the government to impose fresh mobility restrictions, which inhibited foreign investment inflows.
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he Investment Ministry reported on Wednesday that foreign direct investment (FDI) had declined in the July to September period as the government implemented emergency public mobility restrictions (PPKM Darurat) to contain a second COVID-19 wave.
FDI was down 2.7 percent to Rp 103.2 trillion (US$7.1 billion) in the third quarter from a year earlier, the ministry reported. The Delta variant outbreak led to a reversal of the rapid annual growth of 19.6 percent seen a quarter earlier.
Investment Minister Bahlil Lahadalia said the recent decline in FDI was largely because many skilled workers from abroad could not come into Indonesia to work on their respective projects because of PPKM.
In contrast to FDI, domestic direct investment (DDI) was up 10.35 percent year-on-year (yoy) to Rp 113.5 trillion in the third quarter. This was less than the 12.7 percent annual growth seen in the previous quarter.
Overall, direct investments amounted to Rp 216.7 trillion in the third quarter, up 3.7 percent from a year earlier. As of September, 73.3 percent of the annual direct investment target outlined by President Joko “Jokowi” Widodo had been met.
“I believe our target will be achieved,” Bahlil said at a press briefing on Wednesday. “We have performed the calculations and mapping of several realized and incoming investments in the fourth quarter.”
The slowdown in direct investment came as the government tightened mobility restrictions to contain the spread of the Delta variant. The outbreak thus hampered the potential impact of the reforms introduced during the period, such as the simplified Online Single Submission (OSS) business licensing platform.
Read also: Direct investment up 10% in first half, but Q3 pressure looms
However, the fall in FDI realization was not as steep as the 6.9 percent annual decline seen in the April to June period last year, when the government imposed similar strict curbs, then called large-scale social restrictions (PSBB).
The largest direct investment in the third quarter was recorded at Rp 28.1 trillion in the housing, industrial estate and office sector, followed by transportation, warehousing and telecommunications.
Singapore, a global financial hub, accounted for 36.2 percent of FDI realization in the third quarter, making it the largest contributor. It was followed by Hong Kong, Japan, China and the United States.
