Mining absorb $1 bio of FDI

Investment realization in Indonesia for the first quarter 2011 reach Rp 53.6 trillion, growth 27.3% from the same period last year. From this total investment figure, nearly three-quarter of it (Rp 39.5 trillion or 73.8%) are foreign direct investment (FDI) in sectors like mining and utilization, and West Java are the biggest location for foreign investors spending their money.

According to a press release by Indonesia Investment Coordinating Board or in bahasa its Badan Koordinasi Penanaman Modal (BKPM), this investment realization has reach 22.3% of the board target for this year Rp 240 trillion. “The investment realization on the 1Q 2011 shows a significant improvement, compared to that of the same period on 2010. This improvement is seen from the increased distribution and amount of investment flows to the outside of Java and the number of domestic direct investment,” said Chairman of BKPM Gita Wirjawan in the statement dated April 26, 2011.

FDI during January to March 2011 increases 11.8% to Rp 39.5 trillion from previously Rp 35.4 trillion. Investment in mining reaps the highest compare to other sectors, which reach $1 billion for 79 projects. While investment in 15 projects of electricity, gas, and water supply booked $600 million, it ranked number two as the highest sectors of FDI. Investment in transport, storage and communication, which consist of 35 projects booked another $500 million, while investment for food crops and plantation in 74 projects reach $400 million. Foreign investors also spend their money in food industry for $300 million in 61 projects.

Singapore turned out to be the biggest country that supports this FDI worth of $1.1 billion for 142 projects. US comes in the second place to bring in $400 million of investment for 24 projects, then Japan follow with $300 million of investment for 78 projects. Surprisingly, British Virgin Island’s investors are also putting their money to this country worth for $200 million for 30 projects. British Virgin Island, a British overseas territory located in the Caribbean, are famous with its paper companies. Its substantial revenue is generated from the registration of offshore companies. Many Indonesian and local companies create company (ies) in the country with only $1. Then, the biggest fifth country in bringing the FDI is United Kingdom with $200 million for 36 projects.

Java is still the biggest place to absorb those foreign investment coming to Indonesia, its 55.8%, while the rest goes to outside Java. Investment in Java grows 24.2% to Rp 23.7 trillion from previously Rp 19.1 trillion. Investors spend most of their money in West Java, it reach $1 billion for 180 projects. Jakarta capital territory ranked the second biggest in terms of location in investment realization, after booked $900 million of investment for 183 projects. Foreign investors also spend $400 million in South Sumatra for 22 projects, $400 million in nine projects in Papua, $300 million for 18 projects in West Kalimantan.

On the other hand, domestic direct investment realization increases 110.4% from Rp 6.7 trillion to Rp14.1 trillion. If you looked closely, in terms of percentage, domestic direct investment realizations for this first quarter are growing from 15.9% to 26.2%. This investment mostly (19%) goes to transport, storage, and communication sector that consist of six projects value Rp 2.7 trillion. Non-metallic mineral industry absorb nearly the same (Rp 2.4 trillion) for 12 projects, while another 12 projects in electricity, gas and water supply sector booked investment of Rp 1.6 trillion. Local investors are also spending their budget of Rp 1.4 trillion to 54 projects in food crops and plantation sectors.

In terms of location, East Java accept the biggest chunk of local investors spending, its Rp2.5 trillion for 31 projects. The next biggest place to spend for these investors is West Java, nearly the same, its Rp 2.3 trillion for 41 projects. Then Jakarta booked Rp 2.2 trillion of investment for seven projects, Central Sulawesi Rp 1.2 trillion for five projects, and South Sulawesi pocketed Rp 1.1 trillion for 10 projects.

At the same time, the Indonesian labor absorption during 1Q 2011 reaches 196,906 people consisted of 73,046 people from domestic direct investment and 123,860 people from FDI. It increases 59.2% from last year 123,685 people. Gita said the increasing realization of investment shows investor confidence for government policies, national economic development, investment climate improvement and the continuous improvement of services to investors at central, provincial and district/city government. “This is also consistent with capital inflow data in recent years recorded by Bank Indonesia. With the joint effort by related agencies, it is expected that the significant increase in investment would strengthen the national economy”.

This domestic and FDI realization are count based on Investment Activity Report (LKPM) submit by the companies on the 1Q 2011. The figures exclude investment in oil and gas, banking, non-banking financial institution, insurance, leasing, and household. The BKPM use an exchange rate of Rp 9,000 to US$1.

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