Indonesia Receives Good Marks for FDI Flows: UNCTA Report

TEMPO.CO, Jakarta - Indonesia has managed to ranked number five among 10 recipients of foreign direct investment (FDI) flows in developing Asia in 2012 and 2013. According to the 'World Investment Report 2014,' released by the United Nations Conference on Trade and Development (UNCTA), Indonesia has recorded a US$18,4 billion of FDI inflows, and US$3,67 billion of FDI outflows in 2013.

UNCTA's annual report, subtitled 'Investing in the Sustainable Development Goals (SDGs): An action plan,' revealed that in terms of FDI inflows, Indonesia is ranked in the 18th position out of 20 hottest economies in 2012 and 2013.

"Indonesia doesn't have an issue with the quantity of investment, but the quality should be improved. What we are seeking is smart investment which could be realized in adding values on natural resources and developing human capital," said Himawan Hariyoga, deputy chairman of investment promotion agency of the Indonesia Investment Coordinating Board (BKPM) last Tuesday in Jakarta.

He predicted that investment in the infrastructure sector will continue to increase in the next five years as the Indonesian government plans to strengthen the infrastructure sector by providing an investment value of Rp 7200 trillion (around US$583 billion).

"But our government would have to rely on foreign investment because of the budget shortage. The government budget only allows around Rp 2000 trillion [around US$166 billion] for infrastructure development," added Himawan.

"Indonesian textile industry has shown an interesting recovery while many investors are relocating from China due to increasing [production] cost. And oil and gas industry in Indonesia is also experiencing shale gas revolution, which affects beyond US and more," said Djisman Simanjuntak, senior economist of the Center for Strategic and International Studies (CSIS) in Jakarta.

On the other hand, Indonesian employers have showed concerns over active labor movement. "After the presidential election on July 9, we have to see a new government's employment policy," said Sofjan Wanandi, chairman of the Indonesian Employers Association (APINDO).

"Foreign investors in labor intensive industry like South Korea and Taiwan are having problems with labor unrest in Indonesia. They are moving out for alternatives of Cambodia and Bangladesh. We need to provide incentives for labor intensive sectors," added Sofjan.

SEULKI LEE