Indonesia: Foreign Direct Investment (FDI) Increases By 40%
Indonesia is experiencing a boom in their economy, with a rise of 40% in the second quarter of this year alone. The biggest economy in Southeast Asia, Indonesia’s Foreign Direct Investment (FDI), had an increase of 39.7% from April-June, making it the biggest increment in the previous decade. The 40% is roughly 163.2 trillion rupiahs or $10.89 billion
In the first quarter, Indonesia had a 31.8% jump. According to the Minister of Investment, Bahlil Lahadalia, the development industries majorly contributed to the FDI’s growth. Sectors such as construction phase-mining and petrochemical sectors played a big role in the FDI’s stellar numbers. This is impressive, given that Indonesia’s FDI does not include banking, oil and gas industries.
The Investment Minister also added that the Indonesian government would be continuing their best efforts to focus on sectors that use renewable energy and metal processing. Apart from the base metal and mining industry, the real estate industry pulls in a good amount of investment which totals up to 81.2 trillion rupiahs; the property sector alone scored up to 26.7 trillion rupiahs in Q2.
One of Indonesia’s provinces, Java, performed outstandingly well with a record of 38% y/y to 157.1 rupiah trillion. It outperformed its more developed counterpart, which had an increase of 32.9% y/y to 145.1 rupiah trillion.
Indonesia’s Ban on Minerals Bears Fruition
In the pursuit of promoting and bringing more FDI into the country, the government placed a ban on bauxite and tin exports. Given that the country is slowly depleting its natural resources, the government came up with policies to stop several mineral exports to encourage onshore processing facilities investment. These plans were put in place to better reform Indonesia’s FDI, which proved to be successful.
Speaking of success, Indonesia’s biggest investors were none other than leading countries such as China, Japan and Singapore. These powerhouses heavily invested in Indonesia during the said crucial period. The nickel ore export ban has attracted significant investment from multiple countries, including China. China invests in Indonesia for its electric car batteries’ components, which require the properties found in extracting nickel ore.
Positive Future Projections for Indonesia’s FDI
The Minister also added by saying that the investment realisation target set by President Jokowi Widodo can still be achieved by year’s end. As of now, 48.7% of the goal set by the President have been achieved. Both foreign and domestic direct investments steadily increased their respective investments, with the former gaining close to 40% and the latter with a 30.8% increase. Although global uncertainties remain in many parts of the world, Indonesia’s economy still experiences strong investment growth and is on a positive trajectory.
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