Experts: RI still attractive investment destination
Indonesia remains an attractive investment destination, especially with economic growth expected to rebound in 2016, experts said at a forum in Jakarta.
According to Aberdeen Asset Management investment director Bharat Joshi, the country offered lucrative returns for investors compared to other emerging markets, even though it was going through a slow period right now.
“Investors are always looking for returns, even with growth of 5 percent only this year. It is very lucrative, because this is real growth. This is not China, where you have 7 percent growth, but the earnings are actually much lower,” he said on the sidelines of “Economic and Capital Market 2016 Outlook”, held by Aberdeen on Thursday.
Joshi said it was “you get what you see in Indonesia,” adding that a 5 percent growth target was still quite realistic.
“You have to bear in mind that the 5 percent growth [will be achieved] despite not having proper infrastructure, despite not having power supply in Sumatra. So despite all of these inefficiencies, you can still get 5 percent.”
The government, as reported before, has set this year’s growth target at 5 percent and expects growth to rebound to 5.3 percent in 2016.
A slight uptick was reported in the third quarter of 2015, as annual gross domestic product (GDP) growth climbed to 4.73 percent from 4.67 percent in the second quarter, supported by higher government spending.
The recovery has fueled optimism that full-year GDP growth may reach 4.9 percent with even more robust spending in the last quarter.
Joshi said that further recovery in 2016 would translate positively for Aberdeen, which currently manages around US$5 billion in assets.
“Can you imagine once the power plants come on stream, we have the Trans-Sumatra [highway], we have the Trans-Java [highway] and we have the toll road connecting TanjungPriok for distribution? So, 5 percent growth is only the base case,” he added.
Other speakers at the seminar shared Joshi’s view.
Paramadina University rector Firmanzah and IPMI International Business School dean Roy Sembel said the economic policy packages recently introduced by the government would pave the way for higher economic activity in 2016.
The government has so far rolled out six deregulation packages since September, which aim at untangling bureaucratic procedures and improving the business climate.
The packages contain various measures and incentives, including a more predictable method to calculate minimum wages, a three-day investment approval procedure at the Investment Coordinating Board (BKPM) and energy price cuts.
There have also been talks about possible income tax incentives in the next package, which, according to Firmanzah, could revive people’s purchasing power.
Meanwhile, BKPM deputy chairman of investment monitoring and controlling AzharLubis said the BKPM was upbeat about achieving the target of Rp 594 trillion (US$43.08 billion) in realized direct investment in 2016.
The figure is set 14.4 percent higher than this year’s target of Rp 519.4 trillion. He claimed that several firms had come to the BKPM, expressing their intentions to invest in Indonesia.
“In the fourth quarter alone, we are looking to see the amount of realized investment reach Rp 145 trillion, higher than Rp 140 trillion in the third quarter,” he said, adding that the new investment would include a US$300 million project for a smelter to be constructed by a Chinese investor.