Indonesia’s Q3 FDI up 16% on commodity processing investment

INDONESIA booked 196.2 trillion rupiah (S$17 billion) worth of foreign direct investment (FDI) in the third quarter, up 16.2 per cent from a year earlier, according to data on Friday (Oct 20) from the Ministry of Investment, which kept records in rupiah terms.

Using the ministry’s official conversion, the third-quarter FDI was equivalent to US$13.3 billion. The data excludes investment in banking and the oil and gas sectors.

South-east Asia’s largest economy has seen a jump in FDI in recent years as it attracts investment in the mineral processing industry, though authorities have cautioned that elections in February may put a pause on companies’ investment decisions.

The ministry’s data showed an acceleration in third-quarter FDI growth. In the second quarter, FDI had risen 14.2 per cent year on year.

“Despite entering a political year, global (investors) have placed great confidence in us,” Investment Minister Bahlil Lahadalia said in a news conference.

He said the outlook for the remainder of the year is clouded by rising geopolitical tensions, including the conflict in the Middle East.

Including from domestic sources, the ministry recorded a total of 374.4 trillion rupiah worth of direct investment in the July-to-September quarter, up 21.6 per cent year on year.

Some 30 per cent of the total investment went into industries that process Indonesia’s natural resources, the ministry said.

These include progress on a petrochemical plant that South Korea’s Lotte Chemical Corporation is building in the town of Cilegon on the north-western shores of Java island, and Freeport Indonesia’s copper smelter in Gresik, East Java.

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The biggest recipient of FDI was the base metals industry, which received US$3.3 billion of investment, followed by chemical and pharmaceutical industry, and mining.

Singapore, China and Hong Kong were Indonesia’s biggest sources of FDI.