The Indonesia Investment Coordinating Board (BKPM) announced today (27/07) that - in rupiah terms - foreign direct investment (FDI) in Indonesia rose 18.2 percent (y/y) to IDR 92.2 trillion rupiah in the second quarter of 2015, the fastest growth pace recorded since 2013. However, in US dollar terms, FDI fell to USD $7.38 billion in Q2-2015 from USD $7.43 billion in the same quarter one year earlier. The BKPM uses an IDR 12,500 per US dollar exchange rate in 2015 and an IDR 10,500 per US dollar exchange rate in 2014.

Read more ›

Japanese investment in Indonesia has declined drastically in 2014 due to concern about the stability of Indonesian politics. Investment realization tumbled to USD $2.7 billion in 2014 from USD $4.7 billion in the previous year. The investment climate of Indonesia in 2014 was plagued by concern about the ‘political year’, referring to the legislative and presidential elections that were organized and the uncertainty they brought about as it was a tight race between market favorite Joko Widodo and controversial candidate Prabowo Subianto.

Read more ›

Government investment service agency Indonesia Investment Coordinating Board (BKPM) targets IDR 524 trillion (USD $42 billion) worth of investments in 2015, a 15 percent growth from estimated investment realization this year (IDR 450 trillion). BKPM is optimistic that after the ‘political year’ of 2014 (due to the legislative and presidential elections) the new government will push for the implementation of various infrastructure projects such as toll roads, harbours and airports, thus making Indonesia more attractive to foreign investors.

Read more ›

Statistics Indonesia announced on Wednesday (05/11) that economic growth in Indonesia reached 5.01 percent year-on-year (y/y) in the third quarter of 2014. This result was slightly below analysts’ forecasts and implies that the slowing trend of economic expansion in Southeast Asia’s largest economy continues. Since 2011, gross domestic product (GDP) growth has been declining amid global and domestic developments. The 5.01 percentage point GDP growth in Q3-2014 was the slowest quarterly growth pace in five years.

Read more ›

A new Asian Development Bank (ADB) report says that the Indonesian economy is expected to slow on weak export performance in 2014 before picking up in 2015 as external demand improves and the new government’s reform agenda takes hold. In an update of its Asian Development Outlook 2014, the ADB trimmed its forecast for 2014 growth in Indonesian gross domestic product (GDP) to 5.3 percent from 5.7 percent expected in April. The ADB expects a growth pace of 5.8 percent in 2015, down from 6.0 percent in April.

Read more ›

Newly elected presidential pair Joko “Jokowi” Widodo and running mate Jusuf Kalla, the pair that will guide Indonesia for the next five years starting from October 2014, propose to raise the target for economic growth in Southeast Asia’s largest economy from 5.6 percent to 5.8 percent in 2015. Furthermore, the pair would like to set a stronger average rupiah rate at IDR 11,600 per US dollar over 2015 (from IDR 11,900 as set in the Revised 2015 State Budget). Several reasons are behind these ambitious targets.

Read more ›

Indonesia’s gross domestic product (GDP) growth in the second quarter of 2014 slowed to 5.12 percent (year-on-year, yoy), thus decelerating compared to the nation’s GDP growth in the previous quarter (5.22 percent yoy). The Q2-2014 GDP growth result was lower than the figure that was projected by the central bank of Indonesia (Bank Indonesia). The institution previously stated that it expected Q2-014 economic growth to reach 5.3 percent (yoy). Below are some comment of Bank Indonesia on economic growth in the second quarter.

Read more ›

According to the Indonesia Investment Coordinating Board (BKPM), Singapore is the largest foreign investor in Indonesia. In the first half of 2014, Indonesia received USD $3.4 billion worth of investments from Singapore. In total, foreign companies invested IDR 150 trillion (USD $12.9 billion) in Indonesia during the first six months of 2014. This is the highest amount of foreign investment that Indonesia has ever managed to attract in a six-month period. It also diluted fears that the legislative and presidential elections would cause a temporary slowdown.

Read more ›

According to data from the Indonesia Investment Coordinating Board (BKPM), total investment realization in Indonesia grew 16.4 percent (year-on-year) in the second quarter of 2014 to IDR 116.2 trillion (USD $10.0 billion), the highest ever quarterly investment result and thus proved that Indonesia’s legislative and presidential elections in 2014 were no reason to postpone direct investments. Foreign direct investment (FDI) was recorded at IDR 78.0 trillion (USD $6.7 billion), while domestic direct investment (DDI) was IDR 38.2 trillion (USD $3.3 billion).

Read more ›

The Indonesia Investment Coordinating Board (BKPM), the investment service agency of the Indonesian government, is optimistic that investment realization in Indonesia (Southeast Asia’s largest economy) can surpass the level of IDR $100 trillion (USD $8.5 billion) in the second semester of 2014. Sectors that see increased investments in this quarter are the consumer goods and mining sectors. Total investments in Indonesia in the first quarter of 2014 reached IDR 106.6 trillion, an all-time record high quarterly investment realization.

Read more ›

Indonesia will most likely not meet its original GDP growth target of 6.3 percent (stipulated in the 2013 State Budget). Yesterday (06/11), it was announced by Statistics Indonesia that Indonesia’s GDP growth figure in the third quarter of 2013 was recorded at 5.62 percent (year-on-year, yoy), the weakest quarterly growth figure since 2009 when the global financial crisis impacted on Southeast Asia’s largest economy. In 2013, Indonesia feels the global impact again, in combination with domestic factors.

Read more ›

Despite the announcement of an economic policy package aimed at overcoming the impact of global financial turmoil, Indonesia's main stock index (IHSG) was not able to end the week on a positive note, while the value of the rupiah on the spot market depreciated 1.68 percent to IDR 11,058 per US dollar on Friday (23/08) amid a majority of strengthening Asian currencies, including the Indian rupee (0.67 percent) and the Thai baht (0.28 percent). Based on Bank Indonesia's mid rate, the rupiah fell 4.4 percent against the US dollar to IDR 10,848 last week.

Read more ›

As had been announced previously, today (23/08) the government of Indonesia released an 'emergency plan' that aims to improve the financial sector while restoring confidence in the country's fundamentals as turmoil emerged on Indonesia's stock exchange, bonds market and the rupiah. Economic minister Hatta Rajasa said that this plan consists of four packages. These four packages cover the current account deficit, rupiah performance, economic growth, purchasing power, inflation and investments.

Read more ›

Although the holy fasting month of Ramadan and subsequent Idul Fitri celebrations always provide a boost for national economic growth in Indonesia as domestic consumption tends to peak, analysts believe that it will not contribute significantly to the government's 6.3 percent GDP growth target this year. During Ramadan and Idul Fitri (known as Lebaran), Indonesian consumers generally spend more on food products, clothes, shoes, tickets for transport and hotels than in other months, and thus lead to increased economic activity.

Read more ›

Apart from the five tax incentives that I have mentioned in a previous column, the Indonesian government also intends to ease two other tax rules in order to boost investments in Indonesia from 2014 onwards. These are the tax holiday and tax allowance. Relaxation of the tax holiday involves an alteration to the period as well as the size of the investment, and relaxation of procedural difficulties. Relaxation of the tax allowance involves the revision of the number of sectors that are eligible and a relaxation of procedures in the form of tax clearance.

Read more ›

The government of Indonesia is busy preparing seven tax incentives to boost investment flows in 2014. Investments currently account for approximately 32 percent of the country's gross domestic product (GDP). Only domestic consumption owns a larger stake towards the economy with 55 percent. The regulatory framework related to the seven incentives is expected to be finalized by the end of this year. The incentives consist of five new ones and the relaxation of two older incentives, namely the tax holiday and tax allowance.

Read more ›