JAKARTA (TheInsiderStories) - Indonesia posted investment realization Rp402.6 trillion (US$27.76 billion) in the first half (1H) of 2020, up by 1.8 percent from same period in the 2019, said the chairman of Investment Coordinating Board on Wednesday (07/22). The realization was 49.26 percent of this year’ targets of Rp817.2 trillion.
He said, the domestic direct investment (DDI) overtake the foreign direct investment (FDI), whit composition 51.4 percent versus 48.6 percent. In the 1H 2020, DDI recorded Rp207.0 trillion and FDI Rp195.6 trillion. If compared to 1H of 2019, the FDI dropped 8.10 percent and DDI up 13.23 percent from previous year.
In the second quarter, said the chairman, Bahlil Lahadalia, the investment realization worth of Rp191.0 trillion, a contraction 4.3 percent from last year (YoY) and 8.9 quarter on quarter (QoQ). Total FDI dropped 6.9 percent YoY and 0.4 percent QoQ to Rp96.69 trillion and DDI plunged 1.4 percent YoY and 16.4 percent QoQ became Rp94.31 trillion.
He stated, “Due to the condition of COVID-19 and caused the realization of investment down 4.3 percent compared to the same period of last year and down 8.9 quarter on quarter.”
Based on the country of origin, Singapore still leads with a total investment of $2.0 billion (28.86 percent) followed by Hong Kong $1.2 billion (17.2 percent), China $1.1 billion (16.8 percent, Japan (9.0 percent) and Korea South (8.1 percent) each $600 million, and other countries $1.3 billion (20.1 percent).
Commenting on the second semester potency, he believed the amount will be higher than the 1H. That the reasoned why his office not revises this year targets. Lahadalia is optimistic that the existence of the omnibus law which is expected to be implemented this year is able to overcome a number of regulatory obstacles and ease of licensing.
The government has also delegated licensing authority from the ministries and institutions back to his office via One-Stop Integrated Service policy. Permits that enter the area will be submitted to the Online Single Submission (OSS), he adds.
He revealed that fiscal incentives such as tax holidays, tax allowances and super tax deduction have also been delegated to his office by the finance ministry. So now all permits and fiscal incentives can be given by the office, for the sake of accelerating investment realization. He also pledged to improve Indonesia’s ranking in the World Bank’s Ease of Doing Business (EODB) index from the current at 73rd to 60th in 2021 and expects to 40th in the four next year.
In line with that, his office and the Indonesia Stock Exchange (IDX) signed on Tuesday a memorandum of understanding (MoU) that will enable the bourse to guide both foreign and domestic businesses to conduct initial public offerings. The agreement could also provide an alternative funding method for small and medium companies that lack the capital to expand, Lahadalia said. In turn, such growth will create new jobs, he added.
“This is the right step with our current economic growth rate stuck at 5 percent. A strategic move needs to be made. The key to economic growth is an investment. Thus, we will guide 26,000 companies to publicly list their businesses in Indonesia,” he said.
Around 668,228 registered companies operated in the country as of December 2019, comprising 642,309 domestic companies and 25,919 foreign companies, according to the Online Single Submission licensing system. Lahadalia said he aimed to lure 1 to 2 percent of the nearly 26,000 foreign companies with the agreement.
In 2019, the investment realization entering the country reached Rp809.6 trillion, above the Rp792 trillion target set by the government. The figures also increased 12.24 percent or Rp88.3 trillion from Rp721.3 trillion reached in 2018. Domestic investment increased 17.3 percent to Rp386.5 trillion, while foreign direct investment rose 8.2 percent Rp423.1 trillion, during this period.
US$1=Rp14,500
Written by Staff Editor, Email: theinsiderstories@gmail.com
