World Economy

Indonesia FDI Reaches $32b in 2017

The biggest beneficiary of FDI in 2017 was the mining sector.
The biggest beneficiary of FDI in 2017 was the mining sector.

Foreign direct investment in Indonesia last year grew 8.5% more compared to 2016, thanks to upgraded global credit ratings and easier regulations, the Investment Coordinating Board, or BKPM, said.

Indonesia received Rp 430.5 trillion ($32.34 billion) in FDI throughout 2017, excluding investments in the banking and oil and gas sectors. In 2016, Indonesia attracted $29 billion in FDI, an increase of 8.4% from the previous year, Bernama reported.

Singapore remained the largest source of investment into Southeast Asia’s largest economy last year, followed by Japan and China. The biggest beneficiary of FDI in 2017 was the mining sector, followed by utilities, machinery and electronics, industry estate and pharmaceuticals.

Despite higher levels of FDI, the head of the investment board, Thomas Lembong, said the country must improve to compete with neighboring countries to win over investors.

“We are still losing to neighboring countries, such as the Philippines, Vietnam and Thailand. We must keep improving the investment climate,” Thomas Lembong said.

Meanwhile, domestic direct investment grew 21.3% to Rp 262.3 trillion from 2016. Those investments were mainly directed to the food, telecommunications, construction, utilities and plantation sectors.

Combined FDI and DDI totaled Rp 692.8 trillion last year, surpassing the government’s target of Rp 678.8 trillion, constituting an increase of 13.1% from the previous year.

Indonesia also secured investment grade ratings last year from all three major debt-rating agencies: Fitch Ratings, Standard & Poor’s and Moody’s.

Standard & Poor’s granted a long-awaited investment grade status to Indonesia in May, granting the country the coveted status from all three major credit rating agencies for the first time since 1997. Fitch Ratings upgraded Indonesia’s long-term sovereign debt rating to “BBB with a stable outlook,” reflecting the country’s improving resilience against probable global financial shocks.

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