Total foreign direct investment (FDI) reached USD 29bn last year (circa 3.3% of GDP), according to the data from the Investment Coordinating Board (BKPM). This is slightly higher than the USD 28bn recorded in both 2014 and 2013. The data suggests that foreign investors remain interested in the economy, despite moderation in GDP growth and concerns over the rupiah stability.
String of policy packages announced by the government towards the end of last year was meant to attract more FDI in the medium-term. Deregulation tops the agenda and the government also offers various new tax incentives. It is commonly thought that an annual FDI of USD 40bn is feasible. It is certainly not an easy target to achieve but the government remains committed to improve business environment in the economy. Indonesia aims to be in the top 40 of the World Bank's ease of doing business index by next year, from being out of the top 100 ranking currently.
The focus will be on the revision of the negative investment list. There is news that the government may allow foreign ownership in more industries, including in e-commerce. Investors understand that the reform process in Indonesia won't bring positive results overnight. To reinforce confidence on the economy's longterm prospect encouraging baby steps along the way are important.
