Foreign giants plan $20.8 billion investment in Indonesia

31 , 2012 | Source: The Jakarta Post

The Investment Coordinating Board (BKPM) has promised to speed up the realization of foreign investment projects worth about Rp 200 trillion (US$20.87 billion) to help spur the country’s economic growth.

 

 ( Factory of the Honam Petrochemical Corporation)

BKPM chairman Chatib Basri said in Jakarta on Thursday that investments in the pipeline would come from a number of major foreign companies including L’Oreal of France, Lotte of South Korea and the Chinese state-owned investment holding company SDIC.

“We are processing all of the investment [applications] but while trying to endorse these, we will also improve several factors to help investment come in soon,” he told reporters at the National Development Planning Board (Bappenas).

Such improvements included the application of an online tracking system to allow investors to check the stages of their permit applications starting from September, Chatib added.

Investments in the pipeline included projects in the manufacturing industry and infrastructure sectors, such as railways and power plants, according to Chatib.

Investment in the manufacturing sector comprises a petrochemical complex totaling $5 billion, to be built by South Korean Honam Petrochemical Corp., Asia’s second-largest petrochemical producer and subsidiary of Lotte Group; cement plants worth $3 billion by the State Development and Investment Corporation (SDIC), China’s largest state-owned investment holding company; and a $126 million tire plant by Italian tire maker Pirelli, according to BKPM’s list.

Several global, fast-moving consumer goods producers are also setting up local plants, such as a cosmetics plant totaling ¤100 million ($125.42 million) by L’Oreal and a diaper factory totaling $300 million by Nippon Shokubai of Japan. In addition, Minerals, Energy and Commodities (MEC) Coal of the United Arab Emirates and National Aluminum Co. (Nalco) of India will also invest $3 billion in building an aluminum smelter along with a railway station and a power plant.

Other projects in the infrastructure sector will cover power plants separately built by Japan-backed power producer Bhimasena Power Indonesia, with investment of $3.7 billion, and China Huadian Engineering Corporation Ltd. with an anticipated investment of $1.6 billion.

Realization of the investment projects would significantly contribute to the achievement of the investment target of Rp 283.5 trillion this year, and Rp 390 trillion next year, Chatib said.

Investment is one of the major contributors to growth in Indonesia, Southeast Asia’s largest economy. The government has said it aims to rely more on investment to add foreign currency reserves in a bid to counter the deficit in the balance of payments, which puts more pressure on the rupiah.

The country’s current account recorded a $3.2 billion deficit in the first quarter and $6.9 billion deficit in the second quarter, partly resulting from the surging imports of capital goods as well as of raw materials and intermediary goods, that has led to the volatility of the local currency.

In contrast with a sizeable drop in exports affected by dousing overseas demand amid a worldwide slowdown, investment still grew rapidly throughout the first half of this year.

During the January-June period, investment rose by 28.1 percent to Rp 148.1 trillion, with foreign direct investment reaching Rp 107.6 trillion, up 30.4 percent from the past year. Such robust investment has helped the country’s economy to expand by 6.3 percent in the given period.

The government expects that investment will further drive the economy, which is officially targeted to grow by 6.8 percent next year.

Total realized foreign and domestic investment in Indonesia jumped by 20.5 percent last year to Rp 251.3 trillion, with foreign direct investment surging by 18.4 percent to $19.28 billion amid global woes.

List of foreign direct investment in the pipeline

• South Korean Honam Petrochemical Corp. will invest US$5 billion to build a petrochemical complex.

• China’s State Development and Investment Corporation (SDIC) will build $3 billion cement plants.

• Italian tire maker Pirelli will set up $126 million tire plant.

• France-based cosmetics giant L’Oreal is constructing a cosmetics plant with an anticipated invesment of ¤100 million ($125.42 million) until 2013.

• Japanese Nippon Shokubai is finishing its diaper factory totaling $300 million.

• Minerals, Energy and Commodities (MEC) Coal of United Arab Emirates and National Aluminum Co. (Nalco) of India will spend $3 billion to build an aluminum smelter, along with a railway station and a power plant.

• Japan-backed power producer Bhimasena Power Indonesia will build a power plant with an investment of $3.7 billion.

• China Huadian Engineering Corporation Ltd. will develop a power plant with an anticipated investment of $1.6 billion.

 

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