Indonesia sees attracting new FDI a challenge, after FDI falls 9.2% in Q1


  • Indonesia
  • Friday, 08 May 2020

Investment Coordinating Board (BKPM) head Bahlil Lahadalia (JP/Donny Fernando)

INDONESIA, May 8 (The Jakarta Post/ANN) - The COVID-19 pandemic has hindered the government’s efforts to attract new investments into the country, as evidenced by the new quarterly figures, according to Investment Coordinating Board (BKPM) head Bahlil Lahadalia.

Foreign direct investment (FDI), which accounts for less than half of total investment, fell by 9.2 percent to Rp 98 trillion (US$6.4 billion) in the January to March period from the same period last year, according to the agency’s data.

With many countries introducing lockdown measures to contain the spread of the SARS-CoV-2 virus, which has infected more than 3.5 million people worldwide and more than 12,000 people in Indonesia, economic activities such as trade and investment are slowing down.

As a result, the share of investment in economic growth rose only 1.7 percent in the first quarter from a year earlier, according to data released on Tuesday by Statistics Indonesia (BPS). In comparison, the share grew by more than 4 percent year on year (yoy) in the fourth quarter last year.

“It is a little bit difficult to expect new investment to flow in amid the COVID-19 pandemic, ” Bahlil said in a virtual briefing on Wednesday.

However, Indonesia’s total investment figure grew 8 percent yoy to Rp 210.7 trillion in the first quarter, bolstered by domestic investment.

Singapore, Indonesia’s largest source of FDI with US$2.7 million in investment in the first quarter, recently recorded a surge in the number of infections, with the country’s number of confirmed cases rising to more than 19,400. The recent surge prompted the city-state to impose a partial lockdown.

Indonesia’s second-largest source of foreign investment, China, is slowly reopening its economy but is not yet functioning at normal capacity.

China’s Purchasing Managers’ Index (PMI), a monthly survey of trends in the manufacturing sector, dipped slightly to 49.4 in April from 50.1 a month earlier, suggesting a contraction.

The COVID-19-induced economic downturn started to impact investment in Indonesia in mid-March, resulting in a decline in FDI, said Bahlil, who formerly led the Indonesian Young Entrepreneurs Association (HIPMI).

The agency is seeking to attract Rp 886.1 trillion in total investment this year, although Bahlil did not rule out the option of revising the target down if the pandemic dragged on to July.

“The BKPM is taking calculated measures to focus on the Rp 708 trillion in investment, which has progressed by 60 to 70 percent, ” said Bahlil. “We are trying to accelerate the realization.”

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