Indonesia Investment to Slow in 2014 Amid Election Uncertainty

January 22, 2014 Leave a comment

Indonesia Investment to Slow in 2014 Amid Election Uncertainty

Indonesia expects investment to slow in 2014, as companies may hold off during an election year, providing less stimulus to an economy grappling with weaker growth and a current-account deficit.Total investment in 2014 is expected to grow 15 percent to about 456 trillion rupiah ($38 billion), after rising 27.3 percent last year, Mahendra Siregar, chairman of the Indonesia Investment Coordinating Board, said in Jakarta today. Total investment last year was the highest since 2010, he said.

Sluggish investment, weaker external demand and higher interest rates mean Indonesia’s economic growth will slow to between 5 percent and 5.5 percent this year and next, the International Monetary Fund projected in an annual assessment on Dec. 16. The Southeast Asian nation is relying on investment to make up for flagging exports as it seeks to narrow a current-account gap that led the rupiah to be Asia’s worst performing currency in 2013.

“In the first half of this year, investment may slow as investors will wait and see to invest in Indonesia until they know who will be the winner for the election,” Eric Alexander Sugandi, an economist at Standard Chartered Plc., said in Jakarta, referring to presidential elections scheduled for July.

The rupiah was little changed after the announcement, down 0.1 percent to 12,120 per U.S. dollar by 10:52 a.m. in Jakarta, according to prices from local banks, after losing 21 percent in 2013.

Foreign Investment

Total investment in the October-to-December period rose 26.4 percent, a faster pace than 22.9 percent in the previous quarter. Foreign direct investment rose 25.4 percent, while domestic investment climbed 28.7 percent, the agency said in a statement.

President Susilo Bambang Yudhoyono, whose second term ends this year, has promised to build more roads, bridges and ports to help attract investors, even as progress remains limited. The government in December announced new rules that ease some restrictions on foreign ownership, including allowing foreigners to own as much as 49 percent of airports and 100 percent of power plants built under public-private partnerships.

To contact the reporter on this story: Novrida Manurung in Jakarta at nmanurung@bloomberg.net

Filed under Macro Trends

Unknown's avatarAbout bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

Leave a comment