Foreign direct investment in Indonesia shrank 12.9% on the year in the April-June quarter as companies wary of policy shifts ahead of the April 2019 presidential election stayed on the sidelines. Foreign Direct Investment shrunk in Indonesia as of August 2018.
Foreign direct investment totaled 95.7 trillion rupiah ($6.56 billion), the Indonesia Investment Coordinating Board said on Tuesday. This marked the first decline in comparable data going back to 2010, according to a board official.
The softer rupiah is another source of concern. Foreign builders of power plants, for instance, normally sell the output in the Indonesian currency. A weaker rupiah means less revenue in their home currencies.
To shore up foreign investment, the government is considering further expanding the tax holiday system for businesses that make large investments, such as building factories. It is expected to extend the break to a maximum of 50 years from the current 20. Foreign Direct Investment will get better tax holiday Indonesia.
But with opposition forces accusing the current government of letting foreigners steal jobs from Indonesians, the Widodo administration may find it difficult to carry out policies that could be seen as giving overseas companies special treatment.
(source: The Strait Times)