JAKARTA (TheInsiderStories) - Indonesia realized direct investment, both foreign direct investment (FDI) and domestic direct investment (DDI) in the first half (H1) 2016 rose 12.3 percent to Rp298.1 trillion (US$22.76 billion) from the same period last year at Rp 259.7 trillion (US$19.82 billion), Franky Sibarani, former chairman of BKPM and newly appointed Deputy Trade Minister, told reporters on Thursday (July 28).
This year, the government expects the realized investment to increase by 15 percent from previous year of Rp545.5 trillion.
BKPM reported that the realized investment in the first quarter has reached Rp146.5 trillion, increased 17.6 percent from the same period last year at Rp124.6 trillion.
The BKPM data shows that DDI in the first half reached Rp50.4 trillion, up 18.6 percent, from Rp42.5 trillion in the same period last year, while realized FDI reached Rp96.1 trillion, rose 17.1 percent from the same period last year at Rp82.1 trillion.
The five largest investors in the quarter were Singapore ($2.9 billion), Japan ($1.6 billion), Hong Kong ($0.5 million), China ($500 million) and Netherland ($300 million).
The increase of both domestic and foreign direct investments gives hope that BKPM’s investment target this year of Rp595 trillion will be achievable.
There has been a positive trend with regard to distribution of investment. FDI is no longer concentrated on Java Island but also in outside Java Island. Based on the BKPM data, the investment in outside Java reached Rp65.8 trillion in the first quarter or 44.9 percent of total investment in the quarter, compared to 43.9 percent in the same period last year.
Realized investment on Java Island reached Rp80.7 trillion in the quarter or 55.1 percent of total investment in the first quarter.
In term of locations of the investment, South Sumatera recorded as the largest investment destination amounting to $1.9 billion, followed by West Java ($1.6 billion), Banten ($0.9 billion, DKI Jakarta ($ 0.6 billion), Central Sulawesi ($ 0.3 billion). The largest domestic investments destinations were recorded by East Java (Rp13 trillion), Central Kalimantan (Rp6.3 trillion), West Java (Rp6.1 trillion), Central Java (Rp5.3 trillion) and Banten (Rp4.3 trillion.
In term of industry sector, the largest investment was recorded by paper, pulp and printing industry amounting to $1.9 billon, followed by basic chemical, chemical and pharmaceutical ($40.9 billion), transportation equipment ($0.8 billon), basic metal and electronics ($0.7 billion and food ($0.5 billion).
Domestic investment mostly went to food industry (Rp8.9 trillion, agriculture and plantation (Rp 8.8 trllion, basic chemical and pharmaceutical (Rp 5.7 trillion); electricity, gas and water (Rp 5.1 trillion and transportation, warehouse and telecommunication Rp 5.0 trillion.
On Wednesday (July 27), President Joko Widodo appointed Thomas Lembong as the new BKPM head, replacing Franky Sibarani. In return, Franky was appointed as Deputy Minister for Trade.
Keep Investment Momentum
Thomas Lembong, newly appointed BKPM Chief and former Trade Minister, said that Franky and himself are on the reformed side of the government in the previous cabinet structure. Both have undertaken various deregulation policies. They have just switched positions and are determined to continue to carry on the policies.
“BKPM has been here since 1980 and have become the pioneer in reforming the economy and issuing deregulation programs (on investments). We have to maintain the role of BKPM,” Thomas Lembong said after the handing over ceremony from Franky to himself as the new BKPM chief.
Commenting on the plan to narrow the gap between the investment commitment and realized investment, Thomas Lembong said that there is no short-cuts. “There are no other choices but reforms and deregulation. We have to simplify (investment) procedures and improve services, including in the regional governments,” he said.
Thomas said he will continue to coordinate with Franky in order to ensure that changes and improvements that have been undertaken in the past 20 months by previous BKPM Chief Franky Sibarani will be continued. “Make sure that we will not lost the momentum,” he said.
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