Indonesia aims at 15% more foreign investment

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Indonesia workersIndonesia on January 21 set an ambitious target of attracting 15 per cent more foreign investment in 2014 than in 2013, a challenging goal as its economy slows and investors grapple with an uncertain policy outlook in an election year, Reuters reported.

Over the past five years, Indonesia reveled in demand by foreign investors for its vast natural resources and a consumer boom that propelled robust growth in Southeast Asia’s biggest economy. However, in 2013 investors’ appetite declined as the rupiah weakened more than 20 per cent against the US dollar, commodity prices fell and the government imposed nationalistic policies, particularly in the vital mining industry.

Foreign investment trends are tough to unravel in Indonesia, which reports commitment figures in rupiah and excludes some sectors – notably oil and gas – from investment board data.

The investment board said that in 2013, the total of foreign direct investment (FDI) was $22.3 billion, an increase of 22.4 per cent compared with the previous year’s 26 per cent gain. For 2014, the investment board said it was targeting FDI of $25.6 billion.

After expanding by more than 6 per cent in four of the past six years, Indonesia’s economy has begun to flag, hurt by declining export proceeds amid weak commodity prices and volatility in consumer spending in the wake of rising fuel costs and higher interest rates. The government has estimated that the economy grew 5.7 per cent in 2013, compared with 6.2 per cent in 2012. The International Monetary Fund sees growth slowing to between 5 per cent and 5.5 per cent in 2013 and 2014.

Indonesia needs solid economic growth to generate jobs and it needs to raise its exports to contain a worryingly-high current-account deficit, which has weighed on the rupiah. The mining industry, a key source of foreign investment in Indonesia and a major job creator, is in turmoil after Jakarta last week banned most mineral ore exports in a bid to force companies to build processing plants at home.

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Reading Time: 2 minutes

Indonesia on January 21 set an ambitious target of attracting 15 per cent more foreign investment in 2014 than in 2013, a challenging goal as its economy slows and investors grapple with an uncertain policy outlook in an election year, Reuters reported.

Reading Time: 2 minutes

Indonesia workersIndonesia on January 21 set an ambitious target of attracting 15 per cent more foreign investment in 2014 than in 2013, a challenging goal as its economy slows and investors grapple with an uncertain policy outlook in an election year, Reuters reported.

Over the past five years, Indonesia reveled in demand by foreign investors for its vast natural resources and a consumer boom that propelled robust growth in Southeast Asia’s biggest economy. However, in 2013 investors’ appetite declined as the rupiah weakened more than 20 per cent against the US dollar, commodity prices fell and the government imposed nationalistic policies, particularly in the vital mining industry.

Foreign investment trends are tough to unravel in Indonesia, which reports commitment figures in rupiah and excludes some sectors – notably oil and gas – from investment board data.

The investment board said that in 2013, the total of foreign direct investment (FDI) was $22.3 billion, an increase of 22.4 per cent compared with the previous year’s 26 per cent gain. For 2014, the investment board said it was targeting FDI of $25.6 billion.

After expanding by more than 6 per cent in four of the past six years, Indonesia’s economy has begun to flag, hurt by declining export proceeds amid weak commodity prices and volatility in consumer spending in the wake of rising fuel costs and higher interest rates. The government has estimated that the economy grew 5.7 per cent in 2013, compared with 6.2 per cent in 2012. The International Monetary Fund sees growth slowing to between 5 per cent and 5.5 per cent in 2013 and 2014.

Indonesia needs solid economic growth to generate jobs and it needs to raise its exports to contain a worryingly-high current-account deficit, which has weighed on the rupiah. The mining industry, a key source of foreign investment in Indonesia and a major job creator, is in turmoil after Jakarta last week banned most mineral ore exports in a bid to force companies to build processing plants at home.

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