Recession-Hit Singapore Dominates Q2 FDI in Indonesia: BKPM

JAKARTA, KOMPAS.com – Singapore investments accounted for almost a third or 28.8 percent of total foreign direct investments in Indonesia in the second quarter of 2020 despite the Covid-19 pandemic knocking the city-state into economic recession.

Singapore’s economy shrank 41.2 percent in the second quarter after the coronavirus pandemic hammered foreign and domestic demand.

Its economic recession, however, has not significantly diminished its investments in Indonesia, said Indonesia's Investment Coordinating Board (BKPM) head Bahlil Lahadalia on Wednesday, July 22. He noted this is due to the city-state being a financial hub that places it in a different position from Indonesia.

“Singapore’s financial position is more driven by the flow of goods and people, while their economy is driven by exports, imports, and tourism,” Bahlil said in a virtual press conference.

Also read :  Relocation of Indonesian Capital to Create Investment Prospects for Asean, China Partners

Besides, he added, the majority of funds from Singapore is not originating from the city-state itself but other countries. This happens because Singapore is a hub for investment entering Indonesia from other countries. 

"Singapore is the liaison to various countries that want to invest in Indonesia. So an investment of 20 or 30 percent can't stagnate because of the problem that Singapore is currently facing. I am sure the investment remains, even though its economy is contracting,” Bahlil said.

During the second quarter of 2020, the realization of foreign direct investment stood at 97.6 trillion rupiahs ($6.6 billion), contributing 50.9 percent of the total investment of 191.9 trillion rupiahs ($13.1 billion).

Here are the top sources of investment:

Singapore
Value: $2 billion
Percentage of total FDI: 28.8 percent
Number of projects: 3,680

Hong Kong
Value: $1.2 billion
Percentage of total FDI: 17.2 percent
Number of projects: 725

China
Value: $1.1 billion
Percentage of total FDI: 18.8 percent
Number of projects: 722

Japan
Value: $600 million
Percentage of total FDI: 9 percent
Number of projects: 2,480

South Korea
Value: $600 million
Percentage of total FDI: 8.1 percent
Number of projects: 1,495

“In the investment realization of the first quarter of 2020, Malaysia was among the top five countries, but it has been replaced by South Korea,” Bahlil said.

(Writer: Yohana Artha Uly | Editor: Erlangga Djumena)

Source: https://money.kompas.com/read/2020/07/22/143614426/bahlil-singapura-resesi-tak-pengaruh-ke-investasi-indonesia?page=1.