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BKPM Sets 17.2 Percent Direct Investment Growth Next Year

BY :YOSI WINOSA & NASORI

JUNE 19, 2017

Jakarta. Indonesia's Investment Coordinating Board, known as the BKPM, has set a total direct investment target — from both foreign and domestic investors — of 17.2 percent next year, thanks to a recent upgrade in the country's sovereign investment rating and a forecast of generally stable investment climate in 2018.

Indonesia should be able to attract Rp 795 trillion in direct investment next year, up from an estimated Rp 678.8 trillion this year, BKPM deputy director of investment monitoring and implementation Azhar Lubis said.

The investment target for next year is the minimum figure needed to get the Indonesian economy to grow at 5.2 percent-5.6 percent next year as set in the state budget.

Azhar said around 62.7 percent of the investment should come from foreign investors and the remainder from local ones.

He said natural resources, minerals, mining, agriculture, manufacturing and fisheries sectors are expected to draw most of the new investment.

Petrochemical, metal, automotive parts and tourism are sectors that are expected to record faster growth next year.

Azhar said the government's push to finish more infrastructure projects — power plants, toll roads, ports — will help the above sectors to grow even faster.

Indonesia's biggest investors are expected to come from Singapore, China, Japan, South Korea, Taiwan and Malaysia.

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Local investors are expected to pour money into property, palm oil processing, fisheries, footwear, textile and creative economy.

The BKPM will improve its one stop service (PTSP) at central and regional levels and do more promotion for the country's priority sectors.

Inflation is estimated to hover around 2.5 percent to 4.5 percent next year, the rupiah at Rp 13,300-Rp 13,500 per US dollar, unemployment rate at 5 percent-5.3 percent and poverty level at 9.5 percent-10 percent.

Global credit rating agency Standard & Poor's has granted a long-awaited investment grade status to Indonesia's sovereign bonds, praising the country's ability to reduce risks in its public finances. This rating upgrade is expected to not only boost investors' confidence in portfolio investment, but also in direct investment.

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