HOME | ABOUT US | CONTACT US | INDEX

Semester 1 investment grows 56.2 percent

Realized investment in Indonesia grew 56.2 percent in the year's first half compared to in the same period last year, with robust foreign investments offsetting a domestic decline, the Investment Coordinating Board (BKPM) says.

Realized investment in the first half of the year reached US$11.32 billion from $7.25 billion in the same period last year, BKPM chairman Muhammad Lutfi said Monday.

Foreign investment in the period reached $10.3 billion, a 153.2 percent increase from $4.1 billion a year earlier, countering a 70 percent decrease in domestic investment to $940 million from $3.15 trillion.

"The drop (in domestic investment) was a result of the fuel price increases, and also because many domestic investors teamed up with foreign investors to open or restart businesses," Lutfi said after a hearing with the House of Representatives Commission VI overseeing trade, industry and investment affairs.

He said the domestic investment slowdown would continue toward the end of the year as investors continued to adjust to increased fuel prices, but he was optimistic the situation would improve in 2009.

The government increased domestic fuel prices in May by 28.7 percent on average to cap a ballooning fuel subsidy amid high global crude oil prices.

Lutfi said the telecommunications sector received the bulk of the foreign investment in the first half of the year, followed by the electronic, transportation and trade and services sectors.

Domestic investors primarily injected funds into food-related sectors, as well as electronics, trade and services and pulp and paper sectors.

Mauritius remained Indonesia's largest foreign investor during the period, followed by Japan, Singapore, Malaysia and Germany.

Commenting on the country's power deficit, Lutfi said it was unlikely the crisis would effect foreign investment in the country.

"The foreign investors are not only attracted by Indonesia's infrastructure, they also see the country as a potential market with its huge population," he said, adding that power crises were also plaguing the United States, China and Vietnam.

"But it's very likely foreign investors will pull out of this country if the power crisis persists," he said.

The government last week issued a regulation forcing manufacturers to reschedule operating hours to offset periods of peak loads on power grids. The regulation obliges companies to move two working days per month to Saturday and Sunday. The regulation will be enacted from July 21 until the end of 2009.

Lutfi also said overseas investors would likely not be put off by the prospect of next year's general election

Indonesia`s economic grew 6.2 percent in 2nd quarter 2008

Jakarta (ANTARA News) - Finance Minister Sri Mulyani Indrawati has estimated Indonesia`s economic growth in the second quarter of 2008 at 6.1 percent so that the economic growth in the first semester of this year was estimated at 6.2 percent.

The minister told a press conference on Wednesday that the economic growth was fueled by household consumption, government expenditure, investment, exports, high raw material and capital good imports.

"Household consumption grew 5.2-5.3 percent as spending for motor-vehicles and electricity remained high," the minister said.

She said investment grew 10.4-10.5 percent while in the same period last year it was only 7-8 percent.

"We will continue to boost investment so that it would reach a two-digit growth at the end of the year," Mulyani said.

Indonesia`s exports in the first semester of this year also booked a growth of 11.9-12.0 percent while imports grew by 11.1-11.2 percent, the minister said.

"Imports of capital goods and raw materials were high while imports of consumption goods fell so that the economic growth in quarter 3 and 4 possibly dropped," she said.

On the realization of state expenditure, the minister said that it reached 36.7 percent of the 2008 revised state budget in the first semester. It tended to be stagnant if compared with that in the same period a year earlier, which stood at 36.6 percent. But this year`s figure is better if compared with that in the first semester of 2006 which were 34.1 percent.

"The realization of the central government`s expenditure which reached 35.4 percent is better than that in 2007 which was 33.7 percent. Transfer to the region reached 39.9 percent," the minister said.

Thus, the economic growth at the end of the year could be kept at 6.2 percent, a pace which would be slower than the previous projection at 6.4 percent.

"This indicated that our economy is not immune to the global economic crisis," she added.

On the occasion, the minister also said that in the first semester of 2008, the year-on-year inflation was recorded at 11.03 percent (6.5 percent in the state budget), Bank Indonesia`s three- month certificate at 8.4 percent (7.5 pct in state budget) and the rupiah exchange rate at Rp9,261 per one US dollar (Rp9,100).

Besides, Indonesia`s crude price reached US$104.4 per barrel (US$95 per barrel in the state budget), oil lifting 937.6 thousand barrels per day (927 thousands pbd in the state budget), volumes of subsidized fuel oil 19.6 million kiloliters of the quota of 35.5 million kiloliters and the volume of kerosene-to-LPG conversion 0.43 kiloliters of the quota of 2 million kiloliters.

Al Hudaiba Comm 322 Villa No.1 Bur Dubai

Phone: (971-4) 398-5666 Fax: (971-4) 398-0804

Designed and maintained by Economic Department of Indonesian Consulate General in Dubai