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Economist at UOB Group Enrico Tanuwidjaja and Haris Handy noted the pick-up in FDI in Indonesia during the third quarter.

Key Quotes

“Indonesia’s direct investment picked up in July to September period from the pandemic-influenced declines recorded in the preceding two quarters. The data from Investment Coordinating Board Indonesia (‘Badan Koordinasi Penanaman Modal’ – BKPM) showed foreign direct investment (FDI) grew by 1.0% y/y to IDR 106.1tr (equivalent to USD 7.4bn, using 2020 national budget IDR exchange rate assumption of IDR 14,400 per USD) in 3Q20 vs. 2Q20’s -6.9%.”

“BKPM reiterated that the new normal habits in economic activities and the government’s responses to COVID-19 in the past 7 months have been able to restore investor’s confidence to invest in Indonesia in the third quarter. The government also sought to maintain strong investment during the pandemic by attempting to entice companies leaving other countries to relocate to Indonesia, developing industrial parks and passing the Job Creation Law.”

“Singapore remained the largest foreign investor in Indonesia, with investments valued at USD 2.5bn for 4,379 projects, followed by China at USD 1.1bn for 879 projects, and Japan at USD 0.9bn for 2,569 projects.”

“Going forward, we are cautiously optimistic that Indonesia will be able to attract much-needed longer-term investment in the country, after the pandemic is over, given the resilient of the domestic economy. Nevertheless, continuous reforms and policy actions, as well as better ground implementation are needed to achieve lower perception of risk, higher and more enduring investments in the future.”