According to the Investment Coordinating Board (BKPM), Foreign direct investment (FDI) in Indonesia grew by 18% y-o-y in the third quarter of 2019, indicating that market confidence has returned after peaceful legislative and presidential elections, which saw the re-election of President Joko Widodo.
Investment between July and September this years reached IDR 105 trillion (USD 7.5 billion). In the same period, domestic investment also increased by 19%. Total investment during the first 9 months of this year reached IDR 601 trillion (USD 43 billion), up by 12% compared with the same period for 2018. Of the total, domestic investment contributed IDR 283 trillion (USD 20 billion), while foreign direct investment stood at IDR 318 trillion (USD 23 billion). Around 76% of the full year investment target has been achieved.
Investments have also started extending beyond Java, Indonesia’s most populous island. In the third quarter, compared to last year, Java saw 14% increase in investment, while regions outside of Java registered 24% growth y-o-y.
Continuous improvements have been put in place by President Widodo to attract investments to Indonesia, especially considering that the neighboring South East Asian countries are benefiting from the U.S.-China trade war. This includes bureaucratic streamlining and cutting red tape, in addition to hints towards revising the country’s labor law.
Currently, Indonesia is at 73rd on The World Bank’s ease of doing business survey. This is seen as a huge improvement compared to its 120th spot in 2014.
(Sources: Jakarta Globe; Nikkei Asian Review)