Indonesia investment growth sped up in Q3: UOB

Sidrap wind farm in South Sulawesi.
Sidrap wind farm in South Sulawesi. The electricity, gas, and water supply sector has one of the largest shares of both domestic and foreign direct investment realisation.
NOVEMBER 12, 2019 - 6:44 PM

INDONESIA'S investment realisation of domestic and foreign direct investment accelerated in the third quarter of 2019, which "reflects confidence among investors in the Indonesian economy following the election victory of the incumbent President Joko Widodo", UOB economists said in a Nov 12 note.

Overall, total investment realisation grew 18.4 per cent year on year, accelerating from the previous quarter's 13.7 per cent pace.

Total realisation of domestic direct investment (DDI) rose 18.9 per cent year on year to 100.7 trillion rupiah, accelerating from 18.6 per cent the previous quarter.

Foreign direct investment (FDI) soared 17.8 per cent to 105 trillion rupiah, up from the previous quarter's 9.6 per cent rise. Singapore was the top country of origin, accounting for US$1.9 billion or 27.1 per cent of FDI realisation.

Investment realisation outside Java rose to 93.6 trillion rupiah in Q3 2019, up from 75.8 trillion rupiah in the year-ago period, in "a reflection of the government’s intention in achieving a balanced growth for development", said UOB's report.

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"Going forward, we are cautiously optimistic that Indonesia will be able to attract much-needed longer-term investment into the country, given the recent positive developments in maintaining low and stable inflation, and growing FX reserves."

The top two sectors for DDI realisation in Q3 were construction, with 15.8 trillion rupiah or 15.7 per cent, and electricity, gas, and water supply, with a similar figure.

Rounding up the top five were mining; transport, warehouse and telecommunication; and food crops, plantation, and livestock each accounted for 10.1 per cent to 12.1 per cent.

For FDI, the transport, warehouse, telecommunication sector took the greatest share, accounting for US$1.8 billion or 25.7 per cent of investment realisation. Coming second was electricity, gas, and water supply, with 22.9 per cent.

Other major sectors for FDI realisation were housing, industrial estate, and office building (10 per cent); metal except machinery and electronic (8.6 per cent); and chemical and pharmaceutical industry (4.3 per cent).