Sunday, 3 June 2012


             The Government estimated that investment realization in Quarter II – 2012 would not face too many obstacles. Evenbased on realization of investments in quarter I – 2012 which was posted at Rp 71.2 trillion of up by 32.8% against same period of 2011, the trend would continue chalk up progress.

            According to Gita Irawan Wirjawan, Head of the Coordinating Board of Investment (BKPM) the investment trend continued to increase due to increasing inflation. To control inflation which had been soaring up through Quarter II 2012, which was feared to interrupt inflation, the Government planned to speed up realization of infra structure development.

            Through quarter II 2012, inflation increase was more on account of Government’s plan to regulate consumption of subsidized oil, in addition to increasing price of food and basic necessities.

            Somehow the condition had no significant impact on investment plant at home, because broadly speaking Indonesia’s macro economy condition remained stable. Government’s optimism was visible from realization of domestic and foreign investment in quarter I this year which reached Rp 71.2 trillion.

             The breakdown was realization of domestic capital investment (PMDN) 19.7 trillion and Foreign Investment (PMA) Rp 51.5 trillion. The investment realization showed a growth of 32.8% compared to same period of 2011.

            One heartening thing was that the investments posted growth to beyond Java where realization was posted at Rp 33.6 trillion or 47.2% of total realization of quarter I. The attainment increased Rp 9.9 trillion or 41.8% of total investment quarter I – 2011.

            The investment outside Java indicated that Java’s prevalence was declining as expected which brought hope there would be broader outspreading of investment. For outside Java the sectors sought after were agriculture and basic chemical industry.

            There were five bug sectors which were attractive to foreign investors (PMA) i.e. minery which booked USD 1.1 billion, warehouse transportation and communication USD 0.8 billion food plants and plantation USD 0.5%, basic metal industry, metal goods and electronics USD 0,5% and other transportation vehicle industry USD 0.4 billion.

            It was noteworthy that the five above mentioned sectors were capital intensive and also labor intensive at the same time. Naturally most of the sectors being sought after were primary sectors (mining and agriculture) which belonged to the traceable category.

            The countries which booked biggest investment in Indonesia in Quarter 1/2012 were Singapore USD 1.2 billion or 20.1 billion or 20.1% of total foreign investment, Japan USD 0.6 billion or 11%, South Korea USD 0.5 billion or 8.5%, British Virgin Islands USD 0.3 billion or 5.7% and Holland USD 0.3 billion or 4.8%.

            Of all the investor countries only South Korea had signaled to invest more in Indonesia in the next few years so it was predicted that South Korea would be the biggest investor country investing in Indonesia.

            In the past 3 years since the case of subprime mortgage hampered America, Korea’s investment had been constantly well underway in Indonesia. South Korea was even one of the most important export destination country for Indonesia, this was virtually thanks to Korea ability to sustain high economic growth level, moderately at 5% - 6% per annum.

            The Coordinating Board of Investment (BKPM) noted that Korea’s investment from Posco reached USD 6 billion for 5 years which means USD 1.2 billion per year. Than there was Hancock with total investment of USD 2.3 billion in three years of USD 400 million per year. Lastly Samtan with total investment of USD 3 billion in four years of Rp 750 million per year.

            With investment realization in quarter oen this year the Coordinating Board of Investment estimated that the trend of investment in quarter II and onward would continue to increase, moreover the Government planned to build infra structure projects in all development corridors in Indonesia.

            An example was the plan to build powerhouses by the private sector in Sumatra and Java, which were expected to supply electricity needed by the private sector and drum up more private companies to invest in Indonesia. In the future foreign companies might build powerhouses and sell electricity to the State Electricity Company PLN as stand by buyer.

            Previously the Asia Development Bank (ADB) in Indonesia stated that the potential to increase investment in Indonesia this year was considerably great; this was supported by investment realization which was reasonably satisfactory in 2011 last.

            In addition to the above, Indonesia’s attractiveness as a place for investment was thanks to Indonesia’s economic condition which was still favorable. The attainment of investment grade rating by Moody’s Investor’s Services and Fitch Ratings Indonesia was assurance on investment prospect in Indonesia.

            With investment attainment in Quarter 1 – 2012 which was posted at Rp 71.2 trillion it means that by annual standard the amount was Rp 283.5 trillion. The above investment realization was above attainment of 2011 which was Rp 251 trillion or 104.7% of the targetd Rp 240 trillion. Meanwhile investment target this year was Rp 283 trillion.

            So BKPM’s optimism to realize investment plans this year was reasonable and plans were attainable. Naturally, to render hospitable service to investors become prerequisite just as creating a climate conducive to progress was indispensable.

            Labor problem was to be settled the elegant way. Security problem was also to be tackled effectively, just as complexity in land clearing be wisely sorted out. And not less important of course was supporting Public Relations activities through road show, plus advertising campaign in the mass media at national and global level and communications at international forum. 

Business New, May 2, 2012

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