In late-July 2019 Indonesia’s Investment Coordinating Board (BKPM) released the latest direct investment data of Indonesia. The data give rise to some optimism, albeit – generally speaking – direct investment realization comes from a low base in Indonesia (and non-optimal investment realization means the whole economy is not running optimally).
In the second quarter of 2019 (Q2-2019) total direct investment realization in Indonesia climbed 13.7 percent year-on-year (y/y) to IDR 200.5 trillion compared to IDR 176.3 trillion in the second quarter of 2018. Direct investment realization consists of (1) domestic direct investment (DDI) and (2) foreign direct investment (FDI).
FDI rose 9.6 percent (y/y) to IDR 104.9 trillion in Q2-2019 from the same quarter one year ago, while DDI jumped 18.6 percent (y/y) over the same period. These are indeed solid growth rates and can give rise to optimism about direct investment realization in Indonesia.
However, part of the data are somewhat misleading because of the different exchange rates that are used by BKPM (making year-on-year comparisons less meaningful).
When Indonesia Investments contacted Farah Ratnadewi Indriani, who is Deputy for Investment Implementation Control at BKPM, she confirmed that BKPM used an IDR 15,000 per US dollar exchange rate to calculate FDI in Q2-2019 (this rate stems from the central government’s 2019 State Budget as BKPM always uses the rupiah rate that is set by the government in its State Budgets).
(source: Indonesia Investment)