Vice President Says Hardship Means Business

 
 

Vice President Jusuf Kalla expressed his optimism that the economy in Indonesia would improve in the next two to three years and encouraged entrepreneurs to invest now.

Bandung – Vice President Jusuf Kalla expressed his optimism that the economy in Indonesia would improve in the next two to three years and encouraged entrepreneurs to invest now. “The current conditions are quite difficult and it may continue on like this through next year. However, I am convinced that conditions will show improvement in the next two to three years,” said Kalla in his keynote address at the inauguration of the 7th Indonesian Chamber of Commerce and Industry (Kadin) national congress in Bandung on Monday. Investing during a less favorable time, he added, would be beneficial and dynamic entrepreneurs should see the situation as an opportunity. “Now is the time to invest as everything is cheaper. Building a factory now would definitely be cheaper compared to building in the next two or three years,” said Kalla. The government, continued Kalla, are very supportive of entrepreneurs willing to develop the manufacturing industry as this relates to urbanization, a shift in people from rural to urban areas in search of work. “The manufacturing industry could provide bigger job opportunities,” said Kalla before a crowd of 1,000 Kadin members. Based on Central Statistics Agency (BPS) data, slow economic growth would take place during the initial stage of the Joko “Jokowi” Widodo-Jusuf Kalla administration. BPS released economic growth figures for the second quarter of this year, shown at 4.67 percent, slightly lower when compared to the first quarter figure of 4.7 percent. In the third quarter, the economic growth was recorded at 4.73 percent, a slight increase compared to the second quarter. However, according to BPS, the figure was lower compared to the corresponding period last year, which stood at 4.92 percent. Based on BPS data, the numbers of underprivileged people in Indonesia have increased. In March this year, BPS recorded 28.59 million underprivileged people, 11.22 percent of the entire population. Kadin vice chair Shinta Kamdani said that if the government wished entrepreneurs to invest in the manufacturing industry, they would need to provide incentives. “This could be in the form of tax allowance and tax holiday,” said Shinta.

Since September, the government has released six economic stimulus packages as part of its efforts to revive the economy amid global economic downturn, which include fiscal incentives and the streamlining of licensing procedures for a wide range of industries. Meanwhile, outgoing Kadin chairman Suryo Bambang Sulisto said there needs to be synergy between the business world and the government so as to realize businesspeople’s expectations. The interest rate policy is currently regarded by entrepreneurs as being too high. Suryo cited Bank Indonesia’s interest rate of 7.5 percent as the highest and should be lowered. The government can also help entrepreneurs by not setting high interest rates for banks. “Kadin has proposed for the government to spearhead the move and not to ask for bank interest rates that are too high,” he explained. The 7th Kadin national congress, taking place from Monday to Tuesday, is the highest decision-making forum in the organization, in which participants will pick the chairman for the 2015-2020 period. Two contenders, former trade minister Rachmat Gobel and Kadin vice chairman for banking and financial affairs Rosan P. Roeslani, have expressed an interest in the top post. Both of them will run head-to-head, each looking to obtain a total of 132 votes.

Source: The Jakarta Post, November 24 2015

FDI Grows on Investors Hopes for New Government
Friday, 11 December 2015
By : The Jakarta Post - hits : 548

Indonesia maintained strong foreign direct investment (FDI) growth in the third quarter of this year as investors remained upbeat about the country’s long-term outlook following president-elect Joko “Jokowi” Widodo’s announcement of programs to promote growth and reform in Southeast Asia’s largest economy.

Indonesia maintained strong foreign direct investment (FDI) growth in the third quarter of this year as investors remained upbeat about the country’s long-term outlook following president-elect Joko “Jokowi” Widodo’s announcement of programs to promote growth and reform in Southeast Asia’s largest economy.

 

The Investment Coordinating Board (BKPM) reported on Friday that total FDI realization in the third quarter grew 16.9 percent year-on-year to reach Rp 78.3 trillion (US$6.4 billion).

 

Meanwhile, domestic direct investment (DDI) grew 24.2 percent to hit Rp 41.6 trillion. The combination of FDI and DDI took total realized investments from July to September to Rp 119.9 trillion, the highest level ever recorded.

 

Based on his interaction with foreign investors, BKPM Chairman Mahendra Siregar said many investors expressed confidence in the prospect of economic reform under Jokowi, who is regarded as being business-friendly.

 

“The new government and its planned programs are seen as giving new hope,” he told reporters at his Jakarta office. Jokowi will be installed as Indonesia’s seventh president on Oct. 20.

 

For Indonesia, the robust realized investment growth was a positive achievement in a world where countries had to cope with “the new normal” of slower global growth, Mahendra said.

 

“FDI is a permanent source of funds to support econoihic growth, unlike portfolio flows, where the funds can enter or leave the country in a matter of minutes,” he explained.

 

In the third quarter, the sectors that attracted the most FDI were transportation, warehousing and telecommunications, which jointly accounted for $1.1 billion of FDI, with 79 projects realized, according to BKPM data.

 

Foreign investors realized their investments mostly in Jakarta ($1.48 billion of realized FDI), followed by West Java ($1.43 billion), Central Sulawesi ($1 billion) and East Java ($498.1 million). The dollar amounts were based on BKPM’s rupiah assumption of 10,500 per dollar, according to the 2014 state budget.

 

Meanwhile, domestic investors poured most of their money into East Java, which, at Rp 11.4 trillion of realized DDI, was way ahead of East Kalimantan in second place with Rp 4 trillion of investments. “At the regional level, I’ve noticed that the money tends to go to regions that provide a good quality of service to investors,” Mahendra said.

 

Total realized investments are expected to reach Rp 456 trillion this year, a 15 percent increase on last year. As of September, the country had realized Rp 342 trillion of investments.

 

Given the bright prospects, the new administration could aim for around 18 percent growth in total realized investments next year, according to Mahendra.

 

FDI is regarded as a key feature of economic growth in the country, where investments account for 30 percent of the gross domestic product (GDP) the second largest growth driver after consumer spending as well as to support the balance of payments, which is under pressure from the current account deficit.

 

In the second quarter, Indonesia recorded a $4.3 billion surplus in its balance of payments, as the $9.1 billion deficit in the current account was offset by a $14.5 billion surplus in the capital account, supported by inflows from foreign direct and portfolio investments.

 

 

 

Source: The Jakarta Post

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