MARKET DEVELOPMENT
Investment in Indonesia Climbs to Record in Filip for Widodo
Investment in Indonesia Climbs to Record in Filip for Widodo
28/04/2015 (Bloomberg) - Investment in Indonesia climbed to a record as foreign pledges picked up in the first full quarter since Joko Widodo became president, providing a boost to the leader’s goal of revitalizing Southeast Asia’s biggest economy.
Total investment rose 16.9 percent to a quarterly record of 124.6 trillion rupiah ($9.6 billion) in the first three months of 2015 from a year earlier, helped by a weaker rupiah, Franky Sibarani, the head of the Indonesia Investment Coordinating Board, said in Jakarta on Tuesday. Approved foreign investment climbed 14 percent, faster than the 10.5 percent rate the previous quarter.
Widodo, known as Jokowi, took office in October pledging to lift growth by cutting red tape, building infrastructure and attracting investment. By January, he had scrapped gasoline subsidies to free up government funds for spending on transportation and other works. Yet in the ensuing months, his ministers announced rules that made it harder to do business, and a persistent current-account deficit weighed on the rupiah.
“So far investment is still doing well despite depreciation in the exchange rate,” Josua Pardede, an economist at PT Bank Permata in Jakarta, said before the data. “Investment commitment was high due to hopes on Jokowi as he has done structural reform since the beginning of the year.”
Jokowi, a furniture exporter based in Central Java before he entered politics, has pledged to simplify permits, upgrade ports and roads, and curb corruption in the government. He’s set a 7 percent goal for gross domestic product growth within his term ending in 2019, up from last year’s 5 percent.
Manufacturing Slice
One way to achieve that is to get a slice of China’s manufacturing and wean the country off a dependence on exports of minerals and palm oil. Coca-Cola Co. plans a $500 million investment, the investment board said in January.
Singapore, Japan and South Korea were the three biggest sources of foreign investment in the last quarter, the investment board said on Tuesday, without giving details on companies. Total investment growth is expected to stay above 16 percent from April to June as tax incentives lure projects, with the board maintaining a full-year 2015 target for 519.5 trillion rupiah, Sibarani said.
The country is one of the largest single-currency markets in the world by population, after China, India, the U.S. and the euro zone. Balanced against that, the country has some of the worst infrastructure and bureaucracy in the region. Indonesia ranked 114th out of 189 in the World Bank’s 2015 ease of doing business survey, almost 100 places behind Malaysia and more than 30 below Vietnam.
“Favorable demographics, competitive wages and a large and fast growing domestic market is helping Indonesia draw foreign direct investment,” Hak Bin Chua, an economist at Bank of America Merrill Lynch in Singapore, said before the data. “The risk is that infrastructure bottlenecks may threaten to undermine FDI, if the government does not act quickly enough.’
Total investment rose 16.9 percent to a quarterly record of 124.6 trillion rupiah ($9.6 billion) in the first three months of 2015 from a year earlier, helped by a weaker rupiah, Franky Sibarani, the head of the Indonesia Investment Coordinating Board, said in Jakarta on Tuesday. Approved foreign investment climbed 14 percent, faster than the 10.5 percent rate the previous quarter.
Widodo, known as Jokowi, took office in October pledging to lift growth by cutting red tape, building infrastructure and attracting investment. By January, he had scrapped gasoline subsidies to free up government funds for spending on transportation and other works. Yet in the ensuing months, his ministers announced rules that made it harder to do business, and a persistent current-account deficit weighed on the rupiah.
“So far investment is still doing well despite depreciation in the exchange rate,” Josua Pardede, an economist at PT Bank Permata in Jakarta, said before the data. “Investment commitment was high due to hopes on Jokowi as he has done structural reform since the beginning of the year.”
Jokowi, a furniture exporter based in Central Java before he entered politics, has pledged to simplify permits, upgrade ports and roads, and curb corruption in the government. He’s set a 7 percent goal for gross domestic product growth within his term ending in 2019, up from last year’s 5 percent.
Manufacturing Slice
One way to achieve that is to get a slice of China’s manufacturing and wean the country off a dependence on exports of minerals and palm oil. Coca-Cola Co. plans a $500 million investment, the investment board said in January.
Singapore, Japan and South Korea were the three biggest sources of foreign investment in the last quarter, the investment board said on Tuesday, without giving details on companies. Total investment growth is expected to stay above 16 percent from April to June as tax incentives lure projects, with the board maintaining a full-year 2015 target for 519.5 trillion rupiah, Sibarani said.
The country is one of the largest single-currency markets in the world by population, after China, India, the U.S. and the euro zone. Balanced against that, the country has some of the worst infrastructure and bureaucracy in the region. Indonesia ranked 114th out of 189 in the World Bank’s 2015 ease of doing business survey, almost 100 places behind Malaysia and more than 30 below Vietnam.
“Favorable demographics, competitive wages and a large and fast growing domestic market is helping Indonesia draw foreign direct investment,” Hak Bin Chua, an economist at Bank of America Merrill Lynch in Singapore, said before the data. “The risk is that infrastructure bottlenecks may threaten to undermine FDI, if the government does not act quickly enough.’