Indonesia FDI increases most in almost 4 years in Q3

JAKARTA: Foreign direct investment in Indonesia increased at the fastest annual pace in nearly four years in July-September, government data showed on Thursday, which may reflect investors’ appetite after President Joko Widodo won a second five-year term.

Widodo began his new term on Oct. 20, after winning an election in April by promising more investment opportunities to create jobs in the world’s fourth most populous country.

Foreign direct investment (FDI) as recorded by the Investment Coordinating Board (BKPM) had shown contraction for several quarters prior to the election. Officials attributed the trend to weak commodity prices and businesses’ wait-and-see approach during a major political event.

In July-September, incoming FDI rose 17.8% in rupiah terms, from a year earlier, to reach 105 trillion rupiah, according to BKPM data that excludes investment in banking and the oil and gas sectors.

This marked a second straight quarter of growth and the pace was the fastest since the fourth quarter of 2015, according to Refinitiv Eikon data.

“Confidence improved after the election,“ Fakhrul Fulvian, chief economist of Trimegah Sekuritas said.

BKPM said the third quarter’s total investment was equivalent to $7 billion, a touch more from the previous quarter and up about 6% from the same period last year. This represented the first annual growth in dollar terms since January-March 2018.

The board uses the government’s formal assumption of 2019 average rupiah exchange rate at 15,000 a dollar for its conversion. In the third quarter, the rupiah traded in the range of 13,885-14,350 per dollar in the spot market.

Bahlil Lahadalia, Widodo’s new BKPM chief, said the president has tasked him to get investors to not just consider investment plans, but to carry them out.

The president told him investors had in the past “got into the front door, looked at the whole house, and then they exited through the front door again,“ Lahadalia said.

Widodo has told his new cabinet to prioritise simplifying the country’s regulatory framework for their first month in office. He has also promised to cut corporate tax rates, revise strict labour rules and relax foreign ownership limits in some sectors to get more FDI.

Transport, warehousing, and communication sectors were the biggest beneficiaries of FDI in the third quarter, reflecting Indonesia’s booming digital economy. Singapore, Netherlands and China were top sources of FDI in the period.

BKPM data is sometimes met with skepticism by economists, as the numbers don’t always match the central bank’s balance of payments details -Reuters

source https://www.thesundaily.my/business/indonesia-fdi-increases-most-in-almost-4-years-in-q3-XH1559246