Politician and economist, Faisal Basri, urged Jokowi to not compare Indonesia to other nations. (Image via Liputan6.com)

Expert: Jokowi should not pursue foreign investment that much

Alfonsus Adi Putra
Market & Investment
Indonesia Market
Oct 01, 2019
2557
According to an economic expert, President of Indonesia, Joko Widodo, generally known as Jokowi, should not compare Indonesia’s investment performance to other nations. Why? It turned out that Indonesia’s investment performance is not that chronically problematic.

A renowned economist and politician, Faisal Basri, recently the 7th President of Indonesia kept stating worrisome statements about Indonesia’s investment performance such as when Jokowi said that there were no investments that “kick”, and his moaning about 33 Chinese companies that would not relocate their factory line to Indonesia.

For Faisal who is also the grandnephew of the 3rd Vice President of Indonesia, Adam Malik, Indonesia’s investment performance is far better than other neighboring nations empirically.

According to data tabulated by the United Nations Conference on Trade and Development (UNCTAD), Indonesia gathered US$22 billion worth of foreign direct investment (FDI) in 2018. The amount placed Indonesia on the 16th ranking worldwide, better compared to the previous year on 18th ranking. Indonesia was doing better than Singapore, sitting in the 4th place.

Faisal recalled that Jokowi kept on comparing Indonesia to its neighbor Vietnam. According to the UNCTAD data, Vietnam was placed on the 18th ranking with US$16 billion worth of FDI. Therefore, Faisal suggested that Jokowi should not worry too much about the 33 Chinese companies.

Indonesia’s Gross Fixed Capital Formation (PMTB) was also better than other neighboring ASEAN countries. In 2018, Indonesia’s PMTB was recorded at 33.84% to total Gross Domestic Product (GDP) with a 6.01% growth.

The data, again, showed that Indonesia was doing better than other ASEAN countries that only reached as much as 30% PMTB. Faisal questioned why Jokowi wanted to enlarge FDI in Indonesia.

Reflecting on China’s 40% PMTB, Indonesia’s economy will meet its doom if the FDI is too much. It will result in an increase in raw material import, capital goods import. Instead of enhancing FDI, Faisal suggested Jokowi contemplate why the FDI has not reflected in Indonesia’s economic growth which seemed dormant at 5%. According to Faisal, the investment fee in Indonesia is quite astronomical, reflected in the Incremental Capital-Output Ratio (ICOR) score.

Source: https://bit.ly/2nkzvLj

Investment , Market , ASEAN , Indonesia , FDI