Cranes sit idle at a building project in Jakarta last year. (Antara Photo/Aprillio Akbar)
Indonesia FDI Contracts in Q2 as Covid-19 Restrictions Disrupt Projects
BY :TRIYAN PANGASTUTI
JULY 22, 2020
Jakarta. Foreign direct investment into Indonesia has dropped 6.9 percent in the second quarter from the same period last year, showing the latest sign of the country's economic deterioration amid the Covid-19 pandemic.
The Investment Coordinating Board (BKPM) said on Wednesday the largest economy in Southeast Asia saw Rp 97.6 trillion ($6.7 billion) of foreign direct investment come into the country in the April to June period this year, compared to Rp 105 trillion in the same period last year.
Domestic investment reached Rp 94.3 trillion, or 1.4 percent lower than last year.
In total, the domestic and foreign investment fell 4.3 percent in the second quarter to Rp 192 trillion. BKPM data did not include investment in the banking and oil and gas sector.
"The BKPM had expected more than Rp 200 trillion in total for the second quarter, but the Covid-19 pandemic has made it very difficult [to achieve]," Bahlil Lahadalia, the head of BKPM said on Wednesday.
Bahlil said the domestic and foreign investments created jobs for more than 263,000 people, with the latter accounted for around 45 percent of the jobs created.
The top five destinations for investments in the second quarter were Jakarta, West Java, East Java and Banten and Riau. Singapore still accounted for most of the foreign investment, followed by Hong Kong, China, Japan and South Korea.
Several major Indonesia's provinces implemented large scale social restriction since April. They only eased the restrictions last month to curb the spread of Covid-19 disease that already infected around 90,000 people in the country and killed more than 4,320 of them.
The government now expects the economy would contract by 4.3 percent in the second quarter, compared to a 2.9 percent expansion in the first quarter. The World Bank projected the country to register a zero percent growth for 2020.