Since 2010, foreign investment (PMA) or foreign direct investment shows an upward trend every quarter. PMA had its peak in the fourth quarter of 2013, which reached USD 7.4 billion. However, in early 2014, this trend is a bit disturbed. The strongest indication of this decline was in 2014 that coincided with a political agenda, namely the legislative election and the presidential election. The agenda, that will determine the country’s leader makes investors to take a “wait and see” attitude.
Franky Sibarani, Chairman of the Indonesian Employers Association (Apindo), in Jakarta, on Tuesday (August 12), said that the realization of new investment in the domestic industry in the first half of 2014 is not as good as in the same period of last year. Government succession is considered as the main factor that holds investors’ interest in investing their money. He explained that holistically, the realization of capital investment in the industrial sector in first half of 2014 decreased year-on-year (y-o-y). Foreign investment shrank 16.2%, while domestic investment plunged 13.9%.
Franky believed that presidential election became the dominant factor that because the slowdown of investment. He said that during the first 6 months of last year, Foreign Investment (PMA) reached USD 8.01 billion, but in same period of this year it is only USD 6.71 billion. Domestic investment (PMDN) was recorded at IDR 26.92 trillion in the first half of 2013, and decline to IDR 23.18 trillion in the first half of 2014.
He said that the food industry became the main contributor to PMDN growth in the first half. This sector gained an investment worth IDR 9.76 trillion. Another big contribution comes from the chemical and pharmaceutical industries at IDR 3.45 trillion and non-metallic minerals industry at IDR 3.32 trillion. Industry branches that made an enormous contribution to the realization of PMA is the food industry, motor vehicle industry and other means of transportation, as well as chemical and pharmaceutical industries. However, Franky was confident that the second half of this year will be better, because the presidential election process goes well and safe. “The presidential election determines the attitude of investors,” said Franky.
According to him, the conducive atmosphere after the 2014 presidential election creates a positive atmosphere to investment in Indonesia to bring in new investors. He sees that the development of the political situation in Indonesia after the presidential election received great attention from many countries. Maintained Conduciveness, which is maintained, can trigger the creation of a healthy investment climate. A number of foreign investors have been waiting to invest in Indonesia in the form of infrastructure and manufacturing projects that can trigger the growth of new job opportunities. Looking at this condition, the new government, whoever the president is, should ideally be able to create a better investment climate. Investment climate is not only in terms of security, but also conveniences, such as in the case of licensing.
Meanwhile, Minister of Industry, MS Hidayat, said that the government continues to encourage investors to invest in Indonesia because investment in the industry is expected to absorb a lot of workers, and can create multiplier effects on the national economy and increase revenues. Hidayat said that industry branches that contribute greatly to foreign investment include: food industry USD 2.06 billion, automobile industry and other transportation USD 1.03 billion, and chemical and pharmaceutical industries USD 979.4 million.
To encourage investment realization, Hidayat said that the government still provides a wide range of fiscal incentives, such as tax holiday and tax allowance. While some branches of industry whose investment is expected to grow higher are oil and gas-based and mineral resource-based industries as well as agro-based industries. It is said that this is in line with the priority program of the Ministry of Industry, namely the development of agro-based down-stream industries, oil and gas, and mineral materials and improvement of the competitiveness of human resource-based industries, the domestic market, and exports. (E)
Business New - August 15, 2014