RI sees China’s bigger role in investment

JAKARTA. Indonesia registered all-inclusive strong investment growth in the first quarter, as the job creation rate rose significantly, with Chinese investors realizing big investment, apparently aiming to take a bigger share of the pie in Southeast Asia’s largest economy.

From January to March, total realized investment surged 16.9 percent year-on-year (yoy) to hit Rp 124.6 trillion, the highest in history, the Investment Coordinating Board (BKPM) reported on Tuesday.

Realized investment generated more jobs this time, reversing the trend in previous years, as 315,229 new jobs were created in the first quarter, compared to 260,156 in the same period a year earlier.

“The increase in job creation signals that our labor-intensive industry has seen a revival,” BKPM chairman Franky Sibarani told reporters.

Of total realized investment in the first quarter, foreign direct investment (FDI) hit Rp 82.1 trillion, while domestic direct investment (DDI) stood at Rp 42.5 trillion.

BKPM data said that FDI grew 14 percent yoy while DDI rose 22.8 percent.

Singapore, Japan and South Korea remained the three biggest FDI contributors in Indonesia, with the three Asian countries realizing a combined US$3 billion in the archipelago from January to March.

However, last quarter marked the first time in history that businesspeople from China entered the list of the 10-largest foreign investors in the archipelago, according to BKPM data.

China-based companies realized $75.1 million worth of investment in 200 projects in the first three months of 2015, surpassing Australia, which stood in 11th place with $42.6 million worth of investment.

Most of the Chinese companies invested in the mineral-processing industry, notably for commodities such as bauxite and nickel, said BKPM deputy chairman Azhar Lubis.

Azhar said the strong investment growth from China reflected Indonesia’s success with its ore export ban policy, which forbids the export of unprocessed mineral ores. China is among the biggest buyers of Indonesia’s bauxite and nickel.

In the first quarter, foreign investors realized investment mostly in the mining sector, which accounts for $1.1 billion, or 17.3 percent of total FDI, followed by metal and machineries and electronic sector ($800 million, or 11.7 percent) and farming and horticulture ($600 million, or 9.1 percent).

Azhar said the government was on track to meeting this year’s investment realization target of Rp 519.5 trillion, an ambitious goal that is already higher than Rp 450 trillion set last year.

Attracting investments has become the priority of President Joko “Jokowi” Widodo as he seeks to spur economic growth to 7 percent. In 2014, the economy slowed to 5 percent, the slowest level in five years.

In the early weeks of his presidency, Jokowi performed an impromptu visit (blusukan) to the BKPM office as he showed his seriousness to cut bureaucratic red tape for investors.

In January, the President introduced a One-Stop Integrated Service (PTSP) in which investors only have to apply with the BKPM for business permits, no longer across various layers of different ministries.

Azhar said that he would step up marketing campaigns to raise awareness among investors about the PTSP service. “Some domestic investors are not even aware of this facility,” he noted. (Satria Sambijantoro)