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Indonesia Investment Realization Report Quarter I 2018

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The Indonesian Investment Coordinating Board (Badan Koordinasi Penanaman Modal - BKPM) recently released the First Quarterly Investment Realization Report 2018. The result is pretty impressive, Domestic Direct Investment (DDI) and Foreign Direct Investment (FDI) reach significant increase of IDR 185.3 Trillion, grew at 11,8% compared to the same period in 2017.

The BKPM is very optimistic to reach the 2018 national target of IDR 765 trillion. The Government of Indonesia (GOI) also fully support it by issuing some regulations such as Presidential Regulation Number 20 of 2018 (“Reg 20/2018”) to simplify working permit procedure and Presidential Regulation Number 91 of 2017 to simplify investment license procedure. The Reg 20/2018 is particularly expected to improve number of job opportunities, whereby the current direct investments has successfully absorbed 201,239 Indonesian jobseekers.

In terms of investment destination, West Java is still the favorite location for DDI and FDI with the realization of IDR 37 trillion (19.9% of total realization), followed by Special Territory of Jakarta (IDR 28.9 trillion), Central Java (IDR 16.1 trillion) and other cities. It is widely known that many multinational companies establish their factories and the GOI build several toll roads, seaports and airport in West Java.

Real Estate, Industrial Estate and Office Building sector still lead the top three industries in the Quarter I 2018 with IDR 27.6 trillion or equal to 14.9% of total investment, while Metal, Machinery and Electronic Industry and Electricity, Gas and Water Supply are respectively on the second and third rank with IDR 22.7 trillion and IDR 19.3 trillion.

Another strategy of the GOI to improve the investment climate is by issuing new tax holidays regulation under The Minister of Finance Regulation No. 35/MK.010/2018 on Granting of Corporate Income Tax Reduction Facility. It is definitely an interesting package for investors from other countries which is now leaded by Singapore (USD 2.6 billion, 32.6%); Japan (USD 1.4 billion, 16.7%); South Korea (USD 0.9 billion, 11.6%); People’s Republic of China (USD 0.7 billion, 8.3%); and Hong Kong (USD 0.5 billion, 6.3%).
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