30-04-2025
Foreign investment rises 12% in first quarter
Still growing: A major construction project in Jakarta's business district. Singapore was the source of the highest amount of FDI in Indonesia in the first quarter. — AFP
JAKARTA: Indonesia has seen respectable growth in foreign direct investment (FDI) in the first quarter of this year as realised funding reached a quarter of the government's full-year target, while domestic investment grew even faster.
Investment and Downstream Minister Rosan Roeslani revealed in a press briefing on Tuesday that the first-quarter FDI amounted to 230.4 trillion rupiah or about US$13.7bil, which marks a 12% year-on-year (y-o-y) increase.
'This was one of the very, very good indicators, very, very positive amid – what we all could see – the increasing geopolitical and geo-economic tensions. But, we see that the appetite of investors, be they foreign or domestic, to invest in Indonesia keeps increasing,' said Rosan.
He pointed out that the composition between domestic and foreign investment in the first quarter was unusual in that the domestic investment of 234.8 trillion rupiah outstripped FDI.
Rosan argued that this was not because FDI had slowed down, as in fact it had risen, but because the growth of domestic investment at 19.1% y-o-y outpaced the growth of FDI thanks to Indonesians pouring lots of funds into infrastructure projects and real estate.
Total investment logged in the first quarter was 465 trillion rupiah, which marks a 15.9% increase from the first quarter of last year.
That figure amounts to 24.4% of this year's investment target of 1.9 quadrillion rupiah, which Rosan said last week was on track with the target laid down by the National Development Planning Agency.
The largest chunk of the investment went to the metals sector, followed by transportation, mining, other services and housing, in that order.
With US$4.6bil coming in from Singapore in the first quarter, the city state was once again the main source of FDI, which Rosan attributed to its status as a financial hub, meaning the funds could have originated from any country but was routed through Singapore.
China followed with US$4bil, then Malaysia with US$1bil and Japan with roughly the same amount.
Malaysia has only recently become a top-ranking investor to Indonesia.
This was owed largely to the establishment of joint ventures, Rosan explained, without elaborating.
The minister also addressed South Korean LG Energy Solution's recent announcement on withdrawing from a major battery project in Indonesia but noted that the company remained invested in the archipelago through other projects.
He explained that the company had backed down from three investment commitments but had realised a US$1.1bil investment plan in another battery-industry project and was looking to expand that business by pouring in an extra US$1.7bil.
China's Zhejiang Huayou Cobalt is slated to replace LG Energy Solution as the lead investor in Project Titan, a proposed end-to-end production chain from nickel processing to battery-cell manufacturing meant to become the backbone of the country's battery ecosystem.
Rosan said he had met and talked with Huayou and would hold follow-up meetings in May.
The minister expressed confidence that Huayou's investment plan would be realised 'very swiftly', before explaining that the original goal remained the same but that the Chinese company might bring in more advanced technology.
He also revealed that Apple had started land clearing to begin its investment in Batam, Riau Islands, and said the US-tech company might bring more foreign capital to Indonesian soil than planned.
Rosan said he had talked with three Apple vendors, one of whom happened to be Huayou. — The Jakarta Post/ANN
