Indonesia: Solid growth of FDI in Q1 – UOB

Economist at UOB Group Enrico Tanuwidjaja and Haris Handy assess the latest FDI figures in Indonesia.

Key Quotes

“Indonesia’s direct investment rose by 4.3% y/y in January – March 2021 period vs. 3.1% in the last quarter of 2021, underpinned by the positive performance of foreign direct investment (FDI) despite a contraction in domestic direct investment (DDI) during the same period. The data from Investment Coordinating Board Indonesia (“Badan Koordinasi Penanaman Modal” – BKPM) showed FDI grew by 14.0% y/y to IDR 111.7tr (equivalent to USD 7.7bn, using 2021 national budget IDR exchange rate assumption of IDR 14,600 per USD) in 1Q21 vs. 4Q20’s 5.5%. The rebound came as the global economy is slowly recovering from the COVID-19 and as Indonesia’s government begun to implement the Omnibus Law (on jobs creation) by issuing derivatives regulation (Presidential Regulation No. 10, 2021).”

“Singapore remained the largest foreign investor in Indonesia, with investment valued at USD 2.6bn for 3,634 projects, followed by China at USD 1.0bn for 813 projects.”

“BKPM said that the FDI realization in 1Q21 (23.8% of 2021 target) shows the world's confidence in the investment climate and potential in Indonesia. In addition, the government have completed another Omnibus Law derivative regulation, related the implementation of risk-based approach licensing.”