JAKARTA: Indonesia’s investment board chief on Monday warned of delays in investment due to the coronavirus pandemic as first-quarter foreign direct investment (FDI) shrank at its fastest pace in five quarters.
FDI in January-March contracted 9.2% on-year in rupiah terms to 98 tril rupiah (RM28 bil), according to data from the investment board, which excludes banking and oil and gas sectors.
In the board’s calculation, which assumes a 2020 rupiah exchange rate of 14,400 a dollar, FDI fell 5.6% on an annual basis to US$6.8 bil (RM29.7 bil).
Investment board chief Bahlil Lahadalia said the government had only effectively worked 2.5 months in the first quarter due to the outbreak, as some cities began imposing social restrictions.
Lahadalia said no investors have cancelled their projects due to the pandemic, although a number of them have said they would reschedule.
Among them were investors behind the expansion of the Tanjung Jati power plant in Central Java, who had initially set up for ground breaking in March but had to postpone to the end of May, Lahadalia said.
The independent power plant is being developed by Sumitomo Corporation, Kansai Electric Power Co. Inc and PT United Tractors.
“I think things will be difficult in the second quarter, investment realisation will decline because things are hard in March, April and May,” Lahadalia said.
The board has not changed its target for both domestic and foreign investment in 2020 of 886 tril rupiah, he said. But Lahadalia said the agency may miss this target by 69 tril rupiah under his worst case scenario and book just 817 tril rupiah of total investment this year.
“If this outbreak does not end in May, if this drags on to June or July, I must be honest that even the 817 tril rupiah will have to be corrected,” he said.
“But we pray this ends in May.”
The biggest beneficiaries of FDI in January-March were the base metals industry; power, gas and water utilities; transportation; warehousing; and telecommunication. Top sources of FDI were Singapore, China and Hong Kong. – April 20, 2020, Reuters
