Investment in the country in the first nine months of this year increased by 27 percent to Rp229.9 trillion compared with investment figures for the same period last year.
Acknowledging its function as a prime driver of economic development, the government hopes that the increasing investment figures this year would be maintained to boost further economic growth which has been recorded at a level above six percent so far.
“Investments have increased this year and we hope this trend would be maintained,” Deputy Minister for Economic Affairs, Mahendra Siregar said.
According to Siregar, rising investment figures in the 2011 – 2012 period indicated that Indonesia’s economic development and growth are already on the right track and are making progress.
Based on the Report of Capital Investment Activity organization (LKPM), investment realization up to September 2012 reached a value of Rp229.9 trillion, or an increase of 27 percent over corresponding figures recorded last year, which amounted to Rp181.70 trillion.
The Capital Investment Coordinating Board (BKPM) has targeted total investments worth Rp283.5 trillion by the end of 2012. In plain numbers, Rp229.9 trillion worth of investments up to September this year have accounted for 81.1 percent of the target.
“Investment in the first nine months of 2012 grew by 21 percent over those for the same period in 2011. This investment value is relatively high,” Siregar said.
High investment has many positive impacts such as helping push up the gross domestic product (GDP) figures, creating further job opportunities and developing standards of industry.
“Investment has a grave impact on income and greatly enhances employment fields for boosting productivity,” he added.
Therefore, he felt that the increase in investment figures should be maintained and trends indicated that the government would be able to do so, at least until next year.
Siregar added that Indonesia was one of two countries in the G-20 group of developing countries whose economic growth was above 6 percent.
BKPM chairman Chatib Basri said that the board is optimistic that Indonesia’s targeted economic growth of 6.5 percent can be achieved in 2012.
“The target of economic growth can be achieved by increasing the realization of investment in the country,” Basri said.
According to Basri, a significant increase in foreign and domestic investments from January to September 2012 has reflected that Indonesia’s economy will grow as targeted.
He said that the investments consisted of foreign investment worth Rp164.2 trillion and domestic investment worth Rp65.7 trillion.
“Overall, investment projects in the January-September 2012 period were evenly distributed among areas outside Java, with the domestic investment showing positive trends,” he added.
According to him, Rp9.1 trillion of the domestic investment went to the non-metal mineral industry, Rp8.6 trillion to the mining industry, Rp7.7 trillion to the food industry, Rp6.3 trillion to the food crops and plantation business and Rp5.8 trillion to the basic metal, metal goods, machinery and electronics industries.
Based on the BKPM data, US$3.2 billion worth of foreign investment was made in the mining sector, US$2.5 billion in base chemical, chemical goods and pharmaceutical industries, US$1.9 billion in the transportation, warehousing and telecommunication sector, US$1.3 billion in the transportation equipment industry and US$1.3 billion in the base metal, metal goods, machinery and electronic industry.
Meanwhile, Finance Minister Agus Martowardojo has said that the investment sector is expected to become the main economic growth driver in the country.
Martowardojo expressed high enthusiasm with the strong growth of 27 percent in the investment sector in the third quarter of 2012.
“This shows that the investment engine in Indonesia could be relied on to push up our economic growth,” he said on Tuesday.
However, investments should be directed towards the revival of exports which have declined lately as a result of the protracted European economic crisis.
The country’s total exports in the first half of 2012 declined by 2.52 percent and its imports rose 13.2 percent, compared with the same period last year.
Indonesia’s exports during January-July 2012 dropped to US$113.11 billion, from US$116.03 billion recorded in the same period last year. Meanwhile, the country¿s import figures increased to US$112.78 billion this year, from US$99.79 billion in the first half of 2011.
Europe is one of Indonesia’s largest traditional markets for its export commodities, besides Japan and the United States.
“We need to encourage investment to produce more export-oriented commodities,” he said.
The policy is to redress trade balance and to prevent deficit in balance of payments, according to him.
“In order to boost investment, the government has allocated a hefty fund of Rp213 trillion for capital spending in 2013 that could be used for infrastructure development,” he said.
The allocation represents a substantial increase from the fund of Rp170 trillion set for this year.
“The increase reflects the government’s commitment to drive economic growth with higher quality, more inclusive and sustainable infrastructure,” he said.