Indonesia ranked the fourth of the top five countries toreceive the most Foreign Direct Investment (FDI) in East and Southeast Asian region in2012, according to a recently published 2013 World Investment Report compiled by theUnited Nations Conference on Trade and Development (UNCTAD).
Indonesia received a total of 20 billion U.S. dollars of FDI in 2012, ranking the fourthjust after China, China’s Hong Kong, Singapore but before Malaysia. The FDI figurewas similar to what the country got in 2011 when Indonesia was also put in the fourthplace.
In regional term, the ASEAN countries saw a 2 percent increase of overall FDI inflowlast year with Singapore having the largest part of 1.3 percent increase (57 billion U.S.dollars), the report said.
The UNCTAD report disclosed worldwide on Wednesday also noted that FDI inflow inCambodia, Indonesia, Myanmar, the Philippines and Vietnam continued to grow lastyear. Those countries received an increasing amount of FDI driven by the wish ofinvestors to reduce costs for labor-intensive manufacturing, harvest mineral resourcesand participate in infrastructure projects.
It was seen in China’s investment in infrastructure projects in Indonesia and LaoPeople’s Democratic Republic that provided new dynamism to intraregional FDI ininfrastructure.
In global term, the UNCTAD learned that global FDI inflow fell by 18 percent to 1.35trillion U.S. dollars last year. Recovery to more vigorous investment levels will takelonger than expected due to global economic fragility and policy uncertainty.
Developing countries apparently took the lead in attempting FDI last year as they, forthe first time, took more FDI than developed countries. It accounted for 52 percent ofglobal FDI inflows, the report said.
Indonesian analyst from the University of Indonesia (UI) Faisal Basri said that most ofthe FDI in Indonesia was invested in the sectors of manufacturing, telecommunications,automotive, electronics and pharmaceutical industries.
With positive economic parameters and economic potentialities, he said, that Indonesiawould still be a promising investment ground for the investors.
He estimated that Indonesia, the largest economy in Southeast Asia region, will seepositive impacts from the much-expected growing FDI in 2014 to 2015.
“It would be reflected in manufactured goods exports,” Faisasl said in an economydiscussion session held in the UN office here to disclose the UNCTAD report.
He said that Indonesia should take the opportunity from the FDI as it would create jobs,make more value-added products and improve the country’s competitiveness.
“Indonesia should no longer be merely market ground for foreign products. Withimproving competitiveness, it can be production base for exports,” he said.
With over 240 million population and a 6 percent economic growth rate in the last fewyears, Indonesia has great economic potential. Its demographic structure is dominatedby young people, making the country lucrative offer for investors up until 2030, Faisaladded.
On the same occasion, Chairman of Indonesia Employers Association (Apindo) SofyanWanandi said Indonesia has to maintain such a great momentum that allows thecountry to attain higher growth in the future.
He, however, reminded the government to take more serious efforts in improving legalcertainty. He said the decentralization governing system has loopholes that riskscertainty and it would eventually causing problems for business people and investorsintending to start their business in the regions.
“The decentralization had made regulation for business less synchronized. It had madeus frustrated as regulations applied by each regional government different from oneanother. The government should pay higher attention and make improvement on thisissue as it may risk cancellation of investors intending to invest in the region,” Sofyan said.