KUALA LUMPUR, Jan 20 — Indonesia’s foreign
direct investment (FDI) hit a record US$19.3 billion (RM59.8 billion) last
year, the highest in the region, and is expected to rise another 25 per cent
this year despite the gloomy global economy.
In contrast, Malaysia only pulled in about US$10
billion (RM31 billion) last year, same as Vietnam, considered among the other
top growing economies in Southeast Asia.
Indonesia, with a population of 237.6 million,
attracted about as much investment as India and just under one-fifth that went
into China, making it Southeast Asia’s biggest economy, Singapore’s Straits
Times (ST) reported today.
As at October last year, total approved
foreign investments in Malaysia stood at RM26.4 billion.
Approved foreign investments in Malaysia are
primarily in the electrical and electronics industry, accounting for RM7.2
billion; metal-based products (RM2.4 billion); food processing (RM1.8 billion);
chemical and chemical products (RM1 billion); transportation apparatus (RM902.4
million); petroleum products, including petrochemicals (RM520.8 million); and
fabricated metal products (RM520.7 million).
Indonesia’s biggest investor last year was
Singapore with US$5.1 billion, trailed by Japan and the US with US$1.5 billion
each.
Slightly more than half of those inflows went
to its capital Jakarta and the nearby West Java and Banten provinces. The rest
was spread across the archipelago.
A fifth of the Indonesia’s FDI went into
transport, storage and communications. Another fifth went into the mining
sector.
“The key to raising investments in the future
will be regulatory reform,” Indonesia’s trade minister Gita Wirjawan was
reported by ST as saying today, about his country’s boom.
The Singapore daily reported him adding that
Indonesia’s growth was due to “a series of improvements in the investment
climate” at the central and local government levels, including better marketing
efforts.
Gita, who also heads Indonesia’s investment
coordinating board (BKPM), was reported saying its labour laws, which have been
slammed by employers as being too rigid, could be amended.
ST reported observers saying Indonesia’s
economy is largely domestic driven and that the country must dismantle more
hurdles to doing business, such as poor physical and legal infrastructure and
red tape.
The daily said FDI inflows into Indonesia came
on the back of multinationals seeking cheaper labour with China rising up the
value chain.
Investors were also drawn to Indonesia’s
relatively untapped natural resources.
Indonesia’s National Economic Committee chief,
Chairul Tanjung, was reported saying recent credit upgrades could pull in even
more investments, notably in the infrastructure sector.
ST reported that motorcycle and car makers
from Honda and Toyota to General Motors have announced plans to bump up their
operations there.
It reported Standard Chartered economist Fauzi
Ichsan saying consumer sectors like retail banking and pharmaceuticals were
expected to rise as Indonesia’s middle class grows.
University of Indonesia economist Muhammad
Chatib Basri has also written about his country’s economic boom, noting half
the population are under 30 years old.
He wrote in this month’s issue of policy
magazine, Strategic Review: “We need growth above eight per cent through
2030... If we fail, we will leave our grandchildren only serious poverty and
unemployment in 2050.”
Debra Chong
The Malay Insider
Business & Investment Opportunities
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