JAKARTA, KOMPAS.com – The Indonesian body in charge of attracting foreign direct investments (FDI) has warned against Jakarta's dependence on Chinese capital, saying this can have adverse effects on the national economy.
“If China’s economic growth decreases by 1 percent, then it would have a 0.3 percent impact on Indonesia’s economic growth,” Dahlil said.
Dahlil said the Covid-19 pandemic has given Indonesia the impetus to evaluate itself in the hope of ensuring it is not reliant on other countries.
Indonesia's high level of investment from China is believed to have contributed to the low rate of FDI projects that have materialized in comparison to domestic captial actually invested in projects in the first quarter of 2020.
BKPM’s data shows that the rate of FDI projects that have materialized stood at 46.5 percent or equivalent to Rp 98 trillion in March 2020.
On the other hand, out of contracted domestic direct investment, the rate of projects that materialized stood at 53.5 percent or around Rp 112.7 trillion in the same period.
Dahlil attributed the low rate of realized FDI in part to restricted product shipments from China.