ESTIMATE OF DIRECT INVESTMENT 2013

The Coordinating Board of Investments (BKPM) disclosed that realization of Domestic Capi­tal Investment (PMDN) in quarter IV 2012 came to Rp 26.5 trillion. This realization marked an increase of 10.4% compared to realization of PMDN in quar­ter IV 2011 at Rp 24 trillion. Meanwhile realization of Domestic Investment (PMDN) in quarter IV 2012 reached Rp 56.8 trillion or increasing by 22.9% com­pared to quarter IV 2011 at Rp 46.2 trillion.

Various measures to improve investment cli­mate had been made, at central or local Government. An example was one-stop integrated Service (PTSP). We would keep integrating the local governments to immediately increase PTSP.

The accumulative investment realization in January-December 2012 came to Rp 313 trillion, of which realization of PMDN was Rp92 trillion and realization of PMA was Rp 21 trillion. Out spread of project location in quarter IV 2012 outside Java was Rp 30.6 trillion. Compared to same period in 2011 there was an increase of 38.5% of Rp 22 trillion, and realization in Java was posted at Rp 52 trillion.

In quarter IV investment realization outside Java posted notable increase. The increase was because BKPM constantly drove the Provincial Government to apply on-line tracking system because this system had the objective of easing business permit application system.

 Other points which accounted for investment outside Java was the successful execution of the In­donesia Economy Development and Expansion Plan (MP3 EI) particularly in terms of infra structure devel­opment by the central and local Governments. Invest­ment realization in Java through 2012 was Rp 137 trillion.

The realization rose by 33% compared to 2011 amounting to Rp 103 trillion while in Java it was still high, i.e. Rp 175 trillion. Realization of PMDN in quarter IV 2012 by sector were paper industry, paper based goods and printing Rp 2.6 trillion, food industry (Rp 3.4 trillion), paper and printing industry Rp 2.6 trillion and construction Rp 2.4 trillion.

Realization of PMDN by location was East Java, Rp 9.5 trillion, West Java Rp 2.6 trillion, Greater Jakarta Rp 2.1 trillion, Central Kalimantan (Rp 1.3 trillion) and Riau Rp 1.3 trillion. In addition to that, realization of PMA by sector were basic metal industry, machines and electronics USD 1.2 billion, mining USD 1.2 billion, and transportation and telecommunication USD 0.9 billion.

PMA realization by project location was West Java USD 1.2 billion, Greater Jakarta USD 1.1 bil­lion and Banten USD 0.9 billion. In this case Singapore was still on top of the list as biggest investor in In­donesia. They had invested USD 1.4 billion in quarter IV, followed by South Korea USD 0.7 billion and Ja­pan USD 0.7 billion.

BKPM was optimistic that realization of in­vestment in quarter 1-2013 would be better. This was because many foreign investors were applying for in­vestment at BKPM on quarter 1 2013. Besides, on January there were some well known companies who were interested in investing in Indonesia and today they were still at the stage of negotiation with BKPM, such as the Lotte Group of South Korea.

In this case to step up investment climate, BKPM must constantly take various measures. After launching system in October last year, it should be right to implement on line complaint system, which had the objective to give input to internal BKPM on service system, whether the system was right of not.

By this system, soon investors could give input on investment at the central or regional level. In addi­tion to that, other effort was to reduce the number of application form for investment permit. So far there had been more than 30 farms to be filled mandatorily before investing.

BKPM must try to cut the number of forms to 15 only. Too many forms would confuse investors. On the other hand, with the increased investment re­alization in quarter IV, indirectly it would have impact on workers. In this case accommodation of workers in quarter IV 2012 came to 307 thousand people, where PMDN absorbed 149 thousand work­ers and PMA employed 158 thousand workers.

Broadly speaking targeted direct investment of 2012 had been surpassed which was the highest record ever made. This proved that investment climate in Indonesia had been developing well and this year investment realization could surpass target up to Rp 390 trillion. Nearly hall of ASEAN population were in Indonesia. In the long run, investment climate would continue to grow.

By estimate there were three biggest invest­ment sectors which would enter the domestic market in 2013, i.e. the consumer goods sector like ready food in restaurants, the automotive sector and the energy sector.

Apparently the year 2013 was a golden year for direct investors because they would have a sig­nificant increase while there wood be more other sec­tors which would develop. The main factor was the emerging new middle class which increased the need for food.

In the automotive sector the company which-had made their commitment to invest was Toyota; their investment value this year was Rp 27 trillion. The third sector which was to develop was the energy sector especially the electricity generators not ignor­able was the tourism sector.

However, it was realized that if the Rupiah exchange rate vakue was stable at Rp 9,500 per USD, investment realization could be above Rp 300 trillion. Even according to BKPM calculation Indonesia could reach targeted investment of Rp 390 trillion now the problem was how Bank Indonesia could maintain that level of exchange rate.

One thing to be observed by the Government in regard to the heavy flow of direct investment was to compile data of auxiliary components for investors so they did no have to import raw materials and aux­iliary materials which suppressed trade balance. The import up jump the happened last year and predicted to continue this year was because importers could not obtain auxiliary materials at horns which forced them to import from other countries.

Certainly BKPM could not choose only inves­tors according to the availability of raw materials and auxiliary materials at home. Investors only know that Indonesia's good economic prospect with high popu­lation was an attractive market. As with provision of raw materials and auxiliary materials, supposedly the Government was in a positive them. This was one of the home work to be done by the Government so deficit in trade balance could be avoided.

Business News - January 30,2013