Indonesia: Investors Keep Coming

Via The Financial Times, a report on Indonesia’s continued investment growth:

Indonesia continues to defy the global gloom and fears about a deteriorating domestic business environment, reporting record foreign direct investment for the second consecutive quarter.

Although China, India and some other emerging markets are feeling the effects of the slowdown in the west, south-east Asia’s biggest economy seems to be motoring ahead thanks to strong domestic demand and the country’s fast-growing middle class.

Realized foreign direct investment rose by 22 per cent year-on-year to a record Rp56.6tn ($5.9bn) in the third quarter, Indonesia’s investment co-ordinating body, the BKPM, said on Monday, led by the chemical, pharmaceutical, mining and logistics industries.

“Among emerging markets, we are the least unattractive,” said Chatib Basri, chairman of the BKPM. “We are on target for a record year.”

He said that while Indonesia was not immune from the global situation, he was optimistic about the outlook for 2013 as the latest round of quantitative easing by the US Federal Reserve should provide ample liquidity for investors who want to access high growth opportunities in Indonesia.

Basri said Indonesia had a pipeline of around $60bn in new investments that were likely to be realised so long as the global economy did not suffer any further significant weakening.

In addition to global concerns, some analysts have argued that Indonesia risks losing its emerging market star status because of a range of domestic issues, from fears of overheating to an increase in protectionist measures and concerns about poor corporate governance.

The ongoing saga surrounding Bumi plc, the ailing London-listed coal mining group formed by a now ruptured union between British financier Nat Rothschild and Indonesia’s influential Bakrie family, has highlighted the problems that can befall cross-border investments.

Basri accepted that if the uncertainty over Bumi – which is concurrently considering a Bakrie proposal to unwind the London deal and an investigation into alleged financial irregularities – is not resolved soon, “people will start to question doing business in Indonesia.”

This entry was posted on Tuesday, October 23rd, 2012 at 8:59 am and is filed under Indonesia.  You can follow any responses to this entry through the RSS 2.0 feed.  Both comments and pings are currently closed. 

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