By Linda Silaen and Andreas Ismar
Of DOW JONES NEWSWIRES
JAKARTA -(Dow Jones)- Indonesia expects private investment to reach around 200 trillion rupiah ($22.4 billion) this year, up around 50% from below $15 billion a year ago, a senior official said Sunday.
“Our investment realization is currently about 50 trillion each quarter,” Gita Wirjawan, head of the Coordinating Board for Investment, or BKPM, told a news conference. “We’ve about 150 trillion in the year to September, so we’re optimistic to reach 200 trillion.”
The forecast was higher than the initial estimate of IDR160 trillion as investments in the Southeast Asia’s largest economy picking up pace. Investments were ranging between IDR42 trillion and IDR56 trillion in each quarter this year, accelerating from between IDR32 trillion and IDR46 trillion quarterly last year.
Wirjawan did not explain the reason for higher investments, but analysts attributed the pick-up on a more integrated information for investors and shorter period for setting up a business on top of country’s abundant natural resources and huge domestic market.
For many years, investors have had to go to numerous ministries or government agencies to request permits, but a little less than a year ago, BKPM introduced a one-stop service for investments that trimmed the time needed for administrative processes from months to days.
BKPM reported that private investment reached IDR149.6 trillion in the January-September period, up by a third from IDR112.1 trillion a year ago.
Total private investment stood at IDR56.7 trillion in the third quarter, compared with IDR45.7 trillion a year earlier, driven by foreign direct investment which stood at IDR40.1 trillion in the July-September period, up 13.6% from IDR35.3 trillion in the previous year.
BKPM doesn’t include investments in mining and gas, banking and financials, and home industry in its reports.
“From our visit to China earlier this month, there were investment commitments of four to five billion dollars,” Wirjawan said, adding “realization usually within the next two to four years.”
PT Tambang Batubara Bukit Asam (PTBA.JK) in August signed a $1.6 billion agreement with the local unit of India’s Adani group, to develop a railway project to transport coal in South Sumatra province, while earlier this week, South Korea’s Posco (005490.SE) and Indonesia’s Krakatau Steel kicked off its joint venture to construct a 3 million tons per year of steel mill by a ground breaking.
Wirjawan, a former JP Morgan banker, is keen to speed up investments further, especially for public-private partnership program to develop country’s creaking infrastructure.
“We’re finalizing procedures to give clearer guidelines. Days of projects idle for years just because of [a lack of clarity] are nearing an end,” Wirjawan was quoted as saying in August.
-By Linda Silaen and Andreas Ismar, Dow Jones Newswires
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