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April 29, 2017

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Indonesia predicts growth despite DNI revision

Even though it has finally revised the negative investments list (DNI), the Indonesian government has acknowledged the difficulty in pushing up its target of realized investments next year due to the upcoming elections and prevailing uncertainty in the external environment.

Investment Coordinating Board (BKPM) chairman Mahendra Siregar said that he would stick to his initial realized investment target of 450 trillion rupiah (US$36.7 billion) for the full-year of 2014, or a growth of 15 percent from this year.

Last month, he stated that a revision in the DNI, which would open certain sectors to foreign investors, might push up realized investment growth to as high as 25 percent to top 500 trillion rupiah next year.

"I see the impact (from the DNI revision) may not be that huge because of the ongoing uncertainty in the global economy," Mahendra told reporters during a Christmas lunch held at his Jakarta home on Wednesday.

Last year, Indonesia realized total investments of 313.2 trillion rupiah, surpassing its annual target of 283.5 trillion rupiah thanks to a 22.4-percent jump in foreign direct investment (FDI). This year, the government expects realized investment of 390 trillion rupiah, about 25 percent higher than last year's level.

The government this week finally announced the much-anticipated revision of the DNI. The new list stipulates that foreigners will soon be able to have higher ownership in some industries, namely pharmaceutical, ecotourism and management of infrastructure projects such as power plants and seaports.

However, the new DNI was seen as lacking the significant breakthrough needed to sustain high FDI growth as there was only modest relaxation of maximum foreign ownership in power plants and toll roads (raised to 100 percent from the existing 95 percent).

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