World Economy

Indonesia FDI Falls to $6.5b

Indonesia FDI Falls to $6.5b
Indonesia FDI Falls to $6.5b

Foreign direct investment in Indonesia slid in the first quarter of the year as investors stayed cautious while waiting for the government to implement programs to make the country more business friendly.

The official Indonesia Investment Coordinating Board, which is tasked with promoting investment in the country as well as issuing investment permits said Tuesday foreign direct investment fell 4.2% to $6.57 billion in the first quarter from $6.86 billion a year earlier. Compared with the previous quarter, FDI, which excludes investment in the oil, gas and banking sectors, fell 3.1% from $6.78 billion, Nasdaq reported.

Growth in Indonesia last year was 5.02%, the slowest pace in five years. Bank Indonesia predicts the economy will likely to grow by around 5.4% this year.

In Beijing, Indonesian President Joko Widodo witnessed the signing of preliminary commitments from Chinese companies of around $63 billion. In Tokyo, he received interest from Japanese companies for investments totaling $8.9 billion, the investment board announced earlier this month.

Singapore and Japan were the largest sources for FDI for Indonesia during the first three months of the year, as each contributed $1.2 billion. South Korea came in second with $600 million, followed by the UK with $400 million and the US with $300 million worth of investment, the board said.

Around $1.36 billion of the FDI was invested in the mining sectors, mainly to build mineral smelters after Indonesia in January 2014 imposed ban on raw mineral exports. Meanwhile, $765 million was invested in the metal, machinery and electronic industry, $598 million in plantations, $582 million in transport and $534 million in the food and beverage sectors.

The investment board said domestic investors committed 42.5 trillion rupiah ($3.28 billion) during the January-March period, up 23% from 34.6 trillion rupiah a year earlier.