Indonesia's 2015 FDI Rises After Government Stimulus Measures
Foreign direct investment into Indonesia rose almost 20 percent, in rupiah terms, in 2015 from a year ago as investment in the final quarter jumped after a series of government stimulus measures.
Indonesia's Investment Coordinating Board said FDI rose 19.2 percent in 2015 to Rp 365.9 trillion ($26.32 billion), excluding investment in banking, oil and gas sector. Growth in the fourth quarter reached 26 percent on yearly basis.
The board, or BKPM, uses its own exchange rate, which it pegs to the state budget assumption at 12,500 per dollar. That compares with 13,900 per dollar rupiah exchange rate on Thursday.
In dollar terms, investment ticked up slightly last year to $29.28 billion compared to $28.5 billion in 2014, the board said. In the fourth quarter, FDI totaled $7.9 billion, 16 percent more than the same quarter a year earlier.
The rupiah weakened more than 10 percent against the dollar over the past year.
"FDI growth was weak in the first to third quarter last year, so we have to see if this was a one-off jump. But I think some data like cement sales and capital good imports supported the view that investment activities have started to rise," said Aldian Taloputra, Standard Chartered economist in Jakarta.
Growth in Southeast Asia's largest economy is expected to have slowed to a six-year low below 5 percent in 2015, as faltering commodity prices have had a ripple effect across many areas including government revenue, private consumption, incomes and investment.
President Joko Widodo has said the resource-rich economy needs to significantly expand manufacturing and tourism sectors as it can no longer rely on resources alone to drive growth.
After months of struggling to push through reforms and infrastructure projects, Widodo late last year offered a range of incentives — including moves to cut red tape.
"What is interesting in 2015 is that investment in manufacturing rose 43.3 percent, much higher than 2014," BKPM chief Franky Sibarani said, referring to foreign and domestic investment.
This year, Widodo's administration is expected to announce a relaxation to the "negative investment list" — a list specifying what businesses foreigners are barred from entering.
Government officials on Wednesday said it may make the tourism and entertainment industry more open to foreign funds in the revision.
In 2015, the biggest beneficiaries of FDI were mining, transportation, telecommunication and mineral-processing sector.
Singapore was the biggest source of investment in 2015, with Malaysia and Japan coming second and third. BKPM is targeting a rise of between 14 percent to 15 percent in FDI this year.