Foreign Investment into Indonesia in Covid Era increased

The corona pandemic that has hit the world throughout this year has been a heavy blow to economic growth. The impact of the imposition of lockdowns and Large-Scale Social Restrictions (PSBB) in almost all countries has made the world hit by recession.

Investment has also been affected, including in Indonesia. The Investment Coordinating Board (BKPM) acknowledges that the corona pandemic is a threat that will sooner or later affect the stability of a country, including in the form of a decrease in investment value, especially countries that usually invest currently also face the threat of Covid-19.

PRC for example. In 2019, the value of this country's investment in Indonesia reached USD 4.7 billion, this nominal equivalent to 17 percent of the value of foreign investment (PMA) here. The potential impact of their reduced investment in Indonesia is predicted to reach trillions of rupiah.

Quoting BKPM data, the Institute for Development of Economics and Finance (INDEF) predicts that due to the outbreak of Covid-19 there will be a potential loss of investment value of IDR 127 trillion. This is of course influenced by several reasons, one of which is the prospect of increasingly depressed economic growth and activity.

Although the threat of Covid-19 is very real, it does not mean that investment has stopped completely. In fact, not all countries are significantly affected. The World Bank notes that there are four indicators that encourage business entities to invest in a particular country. With these four indicators, the countries that are considered the best to invest in 2020 will be created.

Reporting from the London Post, Indonesia is believed to be strong and is in the midst of boosting massive investment, especially in infrastructure and transportation, so that many countries are interested in investing. Not only that, Indonesia is considered to be the number one choice if investors are interested in investing in manufacturing or consumer goods.

That is why investment realization in Indonesia in the first quarter of 2020 is still in a safe line, reaching Rp. 210.7 trillion, increasing by 8%, compared to the same period in 2019, which was Rp. 195.1 trillion.

"Investment is also quite good when compared to other countries, only growth has fallen, before Covid-19 has fallen." said Prof. Didik J. Rachbini, in the INDEF Online Webinar, Wednesday (12/08/2020).

"Indonesia succeeded in convincing 7 foreign investment companies (PMA) to relocate investment in Indonesia during Covid-19, some of which were the United States, Japan, South Korea and Taiwan. This relocation will impact on creating jobs and opening wide gates. for Indonesia to increase its economic growth again in 2021. " stated the BKPM statement.

In the second quarter of 2020, investment amounted to Rp 191.5 trillion, lower than the Rp 200.5 trillion in the same quarter last year. However, the amount of investment in Semester I 2020, which amounted to Rp. 402.6 trillion, is still 1.8 percent better than the same period in the previous year which reached Rp. 395.6 trillion.

This investment achievement in the first semester contributed 49.3% to the 2020 target which has been adjusted to IDR 817.2 trillion and has succeeded in absorbing 566,194 Indonesian workers.

The Head of BKPM, Bahlil Lahadalia stated that the COVID-19 pandemic had a systemic, massive and structured impact on the global economy, including the Indonesian economy, resulting in a slowdown in investment performance throughout 2020. Nevertheless, BKPM is optimistic that in 2020 investment realization will reach at least IDR 817.2 trillion or around 92.2% of the initial target of IDR 886.0 trillion.

"This target will be achieved if the Government continues to carry out intensive internal consolidation in making maximum efforts oriented towards finding solutions," said Bahlil in a BKPM release last July.

The realization of investment projects is implemented by BKPM through debottlenecking and investment aftercare, namely the process of assisting investors, a special task force to attract more foreign investors has also been prepared. Efforts to integrate regulations to make it easier for investors who will invest during the pandemic have also been realized.


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