Foreign Investment Realization in Indonesia 2018

The Government continues to encourage investment realization in Indonesia through various strategies to attract investors. As a result, realization of investment in Q1 2018 increased by 11.8%, which amounted to Rp 185.3 trillion, compared to the realization of investment in the same period in 2017, which amounted to Rp 165.8 trillion.

5 Sectors with the Biggest Investment Realization

The increase in investment realization in the first quarter of 2018 (January - March 2018) is a combination of investment realization of Domestic Investment (PMDN) and Foreign Investment (PMA). The realization of domestic investment in Indonesia alone was recorded at Rp 76.4 trillion, 11% higher than the same quarter last year which was Rp 68.8 trillion.

Meanwhile, the realization of foreign investment in Indonesia was IDR 108.9 trillion, 12.4% higher than Indonesia’s foreign investment last year which was IDR 97 trillion. From the realization of investment (PMA and PMDN), it absorbs more than 200,000 Indonesian workers and helps boost the people’s economy.

Based on the location of the project, 5 locations with the highest investment realization value were West Java with a value of Rp 37 trillion, DKI Jakarta Rp. 28.9 trillion, Central Java Rp. 16.1 trillion, Banten Rp. 15.5 trillion, and Riau Rp. 9.1 trillion.

Based on the business sector, 5 sectors with the largest investment realization were the housing sector, industrial area and offices with an investment value of Rp 27.6 trillion (14.9%); metal, machinery and electronic industry sector of Rp. 22.7 trillion (12.3%); electricity, gas and water sector amounting to Rp. 19.3 trillion (10.4%); the food and plantation sector in the amount of Rp. 17.9 trillion (9.6%); then the transportation, warehouse and telecommunications sector amounted to Rp. 14.7 trillion (7.9%).

Furthermore, according to BKPM, based on the total investment entered in Q1 2018, the highest investment value came from Singapore with an investment of US$ 2.6 billion (32.6%). Japan with an investment of US$ 1.4 billion (16.7%), then South Korea with an investment of US$ 0.9 billion (11.6%), and China with an investment of US$ 0.7 billion (8.3%).

The increase in realization of these investments does not include the e-commerce or trade sector electronically. According to Thomas Lembong, there are still many business actors in the sector who have not fulfilled administrative obligations so that it is difficult to detect how much the investment value is. If this sector is recorded, then of course the realization value of investment in the first quarter of 2018 will be even greater.

Optimism to be able to achieve the target of investment realization in 2018 is not only based on existing data, but also government efforts to increase investment competitiveness in the eyes of the world. One of the incentives provided by the government is the provision of tax holidays or income tax reduction facilities issued by the Minister of Finance. It is expected that with this facility, in 2018 there will be a significant increase in investment in priority business sectors that enter the pioneer industry class.