RI SEES BETTER INVESTMENT PROSPECTS IN 2014

By Andi Abdussalam

Jakarta, Dec 21 (Antara) - The Indonesian government has predicted that the country's investment target, set at Rp390 trillion this year, could be achieved, expressing optimism that interest by foreign investors in Indonesia will increase in 2014.          Deputy Finance Minister Mahendra Sirgar said he was optimistic that the 2013 investment target of Rp390 trillion will be achieved, regardless that the country's economic growth was slowing.          "If we look at the figure, we can achieve it. I can see that the investment target at Rp390 trillion for the entire year of 2013 can be realized," Mahendra said during a recent seminar.          In the meantime, head of the Finance Ministry's Macro Economic Study Center, Luky Alfirman, said on Thursday that interest by foreign businesses in investing capital in Indonesia would increase in 2014.          "Indonesia will remain a main target for investments by foreign investors," Luky Alfirman said.          He added that the strong interest by foreign investors to make investments in Indonesia was inseparable from the country's promising potential and domestic economic growth, which could exceed five percent.          "Besides that, Indonesia has investment opportunities which are better than those found in other countries," Alfirman said.            Investors who have expressed interest in investing capital in Indonesia include those coming from Japan, China and Singapore.      In the past, these countries have invested their money in natural resources, but now they will invest in consumer goods, such as pharmacies.           "The large number of foreign investors coming to Indonesia will have an impact on the country's economic growth," noted Luky Alfirman.  Indonesia's economic potential has caused a quickening flow of foreign investment into the country.          "We need to take improved steps to attract more foreign investment so that foreigners want to invest their capital in Indonesia," the finance ministry official said.          He noted that the growth of investment in Indonesia was high, reaching some 20 percent per annum.          Based on the Ministry of Finance's data, investment in the third quarter of 2013 reached Rp 100.5 trillion, consisting of domestic investment (PMDN) accounting for Rp33.5 trillion, and foreign investment worth Rp67 trillion.         The investment in the third quarter of 2013 was higher than investment in the first and second quarters which, respectively, stood at Rp93 trillion, made up of domestic investment Rp27.5 trillion plus foreign investment Rp65.5 trillion, and Rp99.8 trillion, including domestic investment Rp33.1 trillion plus foreign investment of Rp66.7 trillion.          "This investment increased 22.9 percent, if compared with the same investment in the third quarter of 2012 which was Rp81.8 trillion. If compared per quarter since 2010, investments have continued to increase from year to year with a range of Rp40 trillion - Rp50 trillion in 2010, Rp50 trillion - Rp70 trillion in 2011, and between Rp70 trillion - Rp80 trillion in 2012," noted Luky Alfirman.          Deputy Finance Minister Mahendra said that investment in the first semester of 2013, based on the Capital Investment Coordinating Board (BKPM) data, stood at Rp192.8 trillion.          Therefore, he was optimistic that the investment target of Rp390 trillion in 2013 would be reached.         However, Mahendra said, he still has to see the development of economic growth in 2014 in order to forecast whether the investment target set at Rp506 trillion was achievable.          "In line with economic growth next year, we still have to see whether the target figure for 2014 is achievable," Mahendra said, as quoted by Republika.co.id last September.          Yet, Mahendra, who is also the head of the BKPM, said that the growth of investment in 2014 could increase by 15 percent, even through economic growth would still face constraints.          "I believe the investment growth will reach 15 percent in 2014. But I will do my best to exceed 15 percent," the BKPM chief said on Dec. 4.       Mahendra noted that the increase in investment could be boosted by investment in downstream industries or in the mineral resources processing industry, in line with the law on mineral and coal development. The law is expected to be put into effect next year.          "It (investment) can be (boosted) in all sectors. But we can start it with the implementation of the new law. This will mean a large investment in mining processing, followed by processing in the basic metal sector or basic chemicals," he said.          He also expressed hope that domestic investment next year will reach 40 percent of total investment values in Indonesia, or almost the same as the values of foreign investment, which always dominated portfolio investments.          "We hope domestic investment in 2014 would reach 40 percent of total investment values. Domestic investment currently accounts for only one third of the total investment," he said.          Like the BPKM, HSBC Indonesia has also predicted that Indonesia will still see positive investment growth in 2014, despite the discouraging trend of an economic slowdown.          Investment would continue to grow because of proper handling of  inflation and the trade balance by the government, HSBC Indonesia Managing Director of Global Markets, Ali Setiawan, said during a seminar last month entitled "HSBC Global Economic Outlook 2014".          "Bank Indonesia (the central bank) has taken a series of steps and the government has been consistent in its policy in dealing with structural problems and redressing the trade balance," Ali said.          He added that foreign investors, particularly Japan, are still interested in doing business in Indonesia.          He said Japan still places Indonesia on top of its investment destination list. "Indonesia has done a good job in the eye of the international community. Indonesia is the most interesting, not only for Japanese investors. European and US investors also are similarly interested," he said.          The investment market is still large in Indonesia, he added, citing Java remaining open for new investments, such as in infrastructure.         "In the infrastructure sector we are still lagging behind neighboring countries. Fundamentally, the Indonesian economy is still growing, therefore, there was cause for much concern," he said.         The government, however, needs to be more transparent and consistent in carrying out its policies, he emphasised.***4*** (T.A014/INE) (EDITED BY INE) (T.SYS/A/BESSR/A. Abdussalam) 21-12-2013 22:03: