Indonesia’s Q2 investment continues to pick up after slowdown last year

03, Aug. 2019

JAKARTA, NNA – Business investment in Indonesia continued to grow in the April-June quarter, with the pace year-on-year increase accelerating sharply from the previous three-month period.

The Investment Coordinating Board released quarterly investment realization data on Tuesday.

Key points:

―― Investment in equipment and other things surged 13.7 percent from a year earlier to 200.5 trillion rupiah ($14.3 billion) in Q2, after increases of 5.3 percent in Q1 and 3.5 percent in Q4 of 2018 and a 1.6 percent drop in Q3.

―― From the previous quarter, investment gained 2.8 percent following a 4.9 percent rise in the previous three months.

―― Domestic investment rose 18.6 percent on year to 95.6 trillion rupiah, accounting for 47.7 percent of the total. Transportation, warehouses and telecommunications led the increase. The increase followed a 14.1 percent gain in Q1.

―― Foreign investment increased 18.6 percent to 104.9 trillion rupiah, or 52.3 percent of the total. The bulk went to utilities. In Q1, it fell 0.9 percent.

―― Singapore topped the list of foreign investors with investment worth $1.7 billion (24.5 percent of the total), followed by Japan with $1.2 billion (17.5 percent) and China with $1.1 billion (16.2 percent).

―― In the first six months of the year, investment climbed 9.4 percent on year to 395.6 trillion rupiah, with domestic investment accounting for 46.2 percent and foreign investment the remaining 53.8 percent. The pace of increase accelerated from a 4.3 percent rise in the second half of 2018.

Takeaway:

―― Indonesia Investment Coordinating Board Chairman Thomas Trikasih Lembong, said investment began to pick up at the end of last year and that the recovery continued in the first half of 2019.

―― Lembong expects investment to show a “low double-digit increase” this year, noting Indonesia’s economic growth has been stable and President Joko Widodo has vowed to attract foreign direct investment through structural reform.

――Among critics, Piter Abdullah Redjalam, research director at the Center of Reform on Economy Indonesia, pointed out that the environment had not improved much to entice more long-term investment in Southeast Asia’s biggest economy. The reform on licensing and land acquisition has been slow, he said.