Jakarta,
Dec 22 (ANTARA) - Observers and government officials have predicted
that foreign investment in Indonesia will continue in 2013, although
certain business circles voiced their pessimism, citing legal
uncertainties and labor unrest.
According to the finance ministry, foreign investment in Indonesia
during the January-September 2012 period increased 27 percent to Rp229.9
trillion, compared with the same period in 2011.
Such strong foreign investment reflected the country's encouraging
domestic economic performance, the head of the finance ministry's state
budget sub-directorate, Agung Widiadi, said recently.
Responding to data from the finance ministry, Capital market observer
Pardomuan Sihombing predicted that the inflows of foreign investments to
Indonesia in 2013 would continue to increase, as returns of investments
in developing countries would be larger than in advanced nations.
However, business leaders have said that the flow of foreign investment
to Indonesia could be slowed due to several factors, particularly legal
uncertainties and widespread labor demonstrations.
"Legal uncertainties in Indonesia cause investors to be concerned.
Investment that would flow into the country could be delayed," Sofyan
Wanandi, the chairman of the Indonesian Businesses Association (Apindo),
said on Friday.
But according to Pardomuan Sihombing, the foreign investment will still
continue to flow to Indonesia, as it will be boosted by certain
factors.
"As long as the Federal Reserve of the United States does not raise its
interest rates, foreign funds will flow into emerging markets,
Indonesia in particular, Pardomuan, who is also the director of PT
Recapital Asset Management, said in a "market outlook 2013", in Jakarta
on Friday.
He added that the remarks made by Federal Reserve Governor Ben
Bernanke, who said he would maintain interest rates at a lower level of
0.025 in the next two years, will boost the returning flow of investment
into Indonesia's capital market.
Further, investors would benefit from larger gains than the returns
they could receive if they invested in other countries. At least the
condition of low interest rates at the US central bank would continue
until 2014.
On conservative accounts, Pardomuan predicted that Indonesia had the
potential to attract Rp20 trillion in foreign funds to be invested in
major shares at the Indonesian Stock Exchange (BEI) in 2013.
He
said that if the BEI authorities were willing to increase foreign funds
invested in the Indonesian shares, it could encourage large-scale
companies to float stakes in the stock exchange market by conducting
initial public offerings (IPO).
Pardomuan
admitted that the number of major companies offering shares with large
capitalizations was still small, so more foreign investors continue to
make investments with stocks of LQ45 classification.
Based on BEI data, the amount of foreign funds flowing into the
Indonesian capital market in 2011 was recorded at Rp24.29 trillion.
The amount of foreign funds up to the middle of December this year, however, remained at Rp15.22 trillion.
Over the past two years, foreign funds flowing into Indonesia's capital market totaled Rp39.51 trillion.
Pardomuan said that foreign investors would still be attracted to
invest in Indonesia's major shares, especially in PT Astra
International's shares, which were recorded to have the largest
capitalization, worth Rp293.50 trillion.
In the meantime, Bank Indonesia officials (BI/the Indonesian central
bank) have said foreign investment in the run-up to the end of 2012 is
increasing.
According to Hendar, the executive director for monetary management
affairs of Bank Indonesia, the central bank has predicted that net
foreign investments during the fourth quarter of this year would reach
US$7 billion, though foreign investment in the first three quarters had
totaled only US$14 billion.
"This shows that the net inflows of foreign investment are increasing
at the end of the year. So, the total net investment inflows up to the
end of 2012 are expected to reach US$21 billion, both in direct
investment and portfolio investment," Hendar said.
He noted that the return of foreign investment to Indonesia was
triggered by the fact that Indonesian economic growth continued, even
during the global economic meltdown during the past several years.
Agung Widiadi of the finance ministry said the high foreign investment
inflows also reflected encouraging domestic economic performance.
In the third quarter of 2012 alone, investment reached Rp81.1 trillion,
a 25.1 percent increase compared to the same period last year, he said.
The third-quarter investment consisted of foreign investment worth
Rp56.6 trillion and domestic investment worth Rp25.2 trillion. Compared
to the same period last year, foreign investment grew 22 percent and
domestic investment rose 32.6 percent, he said.
He noted that the European crisis had a great impact on the national
economy, with exports declining 5.6 percent to US$14.1 billion in August
2012, compared to the same month last year.
Yet the inflow of foreign funds into Indonesia have yet to have
significant impacts on the value of the local rupiah currency, which was
still rated at a range of Rp9,600 per US$1. This is partly due to the
high demand for foreign exchange at home.
"Just take the example of state-owned oil and gas firm Pertamina. It
has to spend a total of US$100 million per day to import fuel oils,
because fuel oil consumption at home continues to increase. This fact
makes the rupiah slow in gaining strength," Hendar added.
However, if the government makes a decision to reduce subsidies for
fuel, fuel imports are expected to decrease and this would also drive
down the need for foreign exchange.
In the 2013 state budget,
total fuel oil subsidies were set at Rp193.8 trillion, consisting of
Rp193.3 trillion in current subsidies and the reduction of subsidies in
2011 amounting to Rp3.5 trillion.***2***
(T.A014/INE/a014)
(T.A014/A/KR-BSR/A/A014) 22-12-2012 18:16: |
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