Thursday, April 21, 2011

Govt expected to realize higher investments in Q2

Linda Yulisman, The Jakarta Post, Jakarta |

The government expects to realize another Rp 60 trillion (US$6.91 billion) in investments in the second quarter this year, following solid growth in realized investments during the first quarter, according to the Investment Coordinating Board (BKPM).

BKPM supervision and implementation deputy chairman Azhar Lubis said on Wednesday that the total realized investments in the first quarter this year increased by 27.3 percent to Rp 53.6 trillion from Rp 42.1 trillion compared with the same period in 2010.

“Domestic investment in the first quarter jumped by 110.4 percent to Rp 14.1 trillion from Rp 6.7 trillion in the same period last year. Foreign investment rose by 11.6 percent in the first quarter this year to Rp 39.5 trillion from Rp 35.4 trillion in 2010’s first quarter,” he told reporters at a quarterly investment report press conference.

According to the report, foreign investment maintained the largest share with 73.8 percent of the total investment. The rise of direct foreign investment was the result of growing confidence among foreign investors about the improving economic conditions and investment climate in Southeast Asia’s largest economy, he said.

However, the contribution of domestic investment had increased quite significantly as well, Azhar said.

“The share of domestic investments to the total investments rose to 26.2 percent in the first quarter of this year from 15.9 percent in the same period last year,” he said.

Azhar said most investments still flowed to Java, around Rp 29.9 trillion or 55.8 percent, while the other 44.2 percent, Rp 23.7 trillion, went to the rest of the country.

The report said the largest contributors to domestic investment in the first quarter of 2011 were from the transportation, storage and telecommunications sectors, with Rp 2.6 trillion (18.9 percent) in 6 projects, followed by the non-metal mineral industry with Rp 2.3 trillion (16.7 percent) in 12 projects and the food and beverage industry with Rp 1.7 trillion (12 percent) in 41 projects.

Most of the foreign investments were in 79 mining projects worth $1 billion, 15 electricity, gas, and water projects worth $606.7 million (13.8 percent) and 35 transportation, storage and telecommunications projects worth $593.1 million (13.5 percent), the report said.

East Java was the most preferred province for domestic investment, with receiving Rp 2.45 trillion (17.5 percent), followed by West Java with Rp 2.34 trillion (16.7 percent) and Greater Jakarta with Rp 2.17 trillion (15.4 percent).

Foreign investors chose West Java as their top investment destination, which received around $1.12 billion (24.61 percent), followed by Greater Jakarta and South Sumatra, which absorbed $850.7 million (19.4 percent) and $363.2 million (8.3 percent) respectively. Papua, ranked as the fourth most preferred investment destination in the first quarter, took in around $350.6 million (8 percent) in foreign investments, followed by West Kalimantan.

“The investments coming into these two regions outside Java, putting them among the top five investment destinations, signals that the investments are getting more evenly distributed,” Azhar said.

He added that Singapore was still the largest foreign investor, putting about $1.14 billion (25.9 percent) into 142 projects, followed by the US with $359.1 million (8.2 percent) in 24 projects and Japan with $345.2 million (7.9 percent) in 78 projects.

The government hoped to attract Rp 240 trillion in investments this year, a 15 percent increase from
Rp 208.5 trillion in 2010.

Azhar said the government would provide various incentives to big investors, being those with a total investment of more than $1 billion.


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