JAKARTA (TheInsiderStories) – Indonesia’ Investment Coordinating Board announced the realization of investment during 2018 only rose four percent compared to previous year worth of Rp721.3 trillion (US$51.15 billion). Compared to the this year’ target the total investment was only reached 94.3 percent.
The failure to achieve the target, said the chairman Thomas Lembong on Wednesday (01/30), mostly caused of the decline of Foreign Direct Investment (FDI). The foreign investment dropped significantly to Rp 392.7 trillion compared to 2017′ values of Rp430.5 trillion, or lowered 9.62 percent.
He blamed the globally conditions caused the investment realization not achievable, especially trade war sentiment between United States and China. Lembong pointed out, UNCTAD data shows that international FDI globally fell 20 percent in 2018.
“So 2018 is indeed a very difficult year for foreign investment globally,” Lembong said at his office.
Lembong acknowledged, the transition of licensing to the One Single Submission (OSS) system also affected the trend of investment slowdown. However, he is optimistic that this year’s investment (2019) will increase with the new system and through a more pro-investment policy.
On quarter basis, total investment in first quarter (1Q) recorded Rp108.9 trillion, 2Q worth of Rp95.7 trillion, 3Q Rp84.7 trillion, and fourth quarter with amount Rp99.0 trillion. While in 2017, 1Q Rp97 trillion, 2Q Rp109.8 trillion, 3Q Rp111.7 trillion, and 4Q Rp112 trillion.
In details, by the business sector, the total realization of investment in the electricity, gas and water sector Rp 117.5 trillion (16.3 percent), transportation, warehouse and telecommunications Rp 94.5 trillion (13.1 percent), food industry Rp 68.8 trillion (9.5 percent), and housing, industrial estates and offices Rp 56.8 trillion (7.9 percent).
Meanwhile, investment realization based on country of origin, Singpaura US$ 9.2 billion (31.4 percent), Japan US$ 4.9 billion (16.7 percent), China US$ 2.4 billion (8.2 percent), Hong Kong US $ 2 billion (6.8 percent ), and Malaysia US$ 1.8 billion (6.2 percent).
Furthermore, by project location (top 5), West Java Rp 116.9 trillion (16.2 percent), DKI Jakarta Rp 114.2 trillion (15.8 percent), Central Java Rp 59.3 trillion (8.2 percent), Banten Rp 56.5 trillion (7.8 percent) and Java East Rp 51.2 trillion (7.1 percent).
However, if calculated based on geographical location, the realization is as follows: Sumatra Rp 122.7 trillion (17 percent), Java Rp 405.4 trillion (56.2 percent), Kalimantan Rp 83.1 trillion (11.5 percent), Sulawesi Rp 54.6 trillion (7.6 percent), Bali and Nusa Tenggara Rp 28.1 trillion (3.9 percent) and Maluku and Papua Rp 27.4 trillion (3.8 percent).
After recorded a weak investment realization in 3Q of 2018, Lembong has proposed to the Minister of Finance and Minister of National Development Planning to slashed this year investment target from Rp765 trillion to Rp730 trillion.
Lembong said, this change was based on evaluations in the last two quarters that continued to decline. In the second quarter of 2018 the realization investment dropped significantly from Rp185.3 trillion to Rp176.3 trillion. The decline occurred again in the third quarter (3Q) the investment realization was only able to penetrate to Rp173.8 trillion.
Indonesia’s investment realization in 3Q decreased by 1.6 percent to 173.8 trillion, caused by foreign investment. Otherwise, domestic investment still recorded growth by 4.32 percent to 535.4 trillion Rupiah.
Although the investment rate has slowly declined, he remains optimistic that the government’s initial target to withdraw funds in this sector can be achieved.
But Lembong more optimistic on 2019 outlook. He estimating the realization investment could reach Rp702.3 trillion in this year. The reasoned, Indonesia’ economy will improve this year after the election time. He noted, “The investment will recover.”
On the same time, Deputy for Investment Control of Investment Coordinating Board Farah Ratnadewi Indriani said that the realization of the absorption of Indonesian labor in the fourth quarter of 2018 reached 25,239 people, with 142,478 in the domestic investment project and 112,761 in the foreign investment sector.
“In addition to the digital economy, Indonesia still has attractive sectors to be explored in 2019 such as the lifestyle, industry 4.0 and the tourism industry to absorb as much as possible domestic workers,” she explained.
Separately, Finance Minister Sri Mulyani Indrawati promised to support increased investment through various fiscal incentives like tax holiday and tax allowances. She believed through this policies the investment commitments to reach more than Rp160 trillion.