The Jakarta Post, Jakarta | 19 December 2008
The government aims to net more investment from Middle East oil state main players next year, in particular in the agricultural sector, despite the global economic downturn, says a government official.
Investment Coordinating Board (BKPM) chairman Muhammad Lutfi said Thursday that Arab investors were largely unaffected by the economic recession sweeping the developed economies and should therefore be factored into the inward investment picture.
"I noticed that (Middle Eastern investors) had windfall profits of US$1.6 trillion as of August this year from (earlier high prices of) oil," he told reporters after a gathering at the Industry Ministry.
"That means they have (the liquidity) to invest here," he said, but did not elaborate on the targeted amount of investment to come here.
He said the United States, which used to be among the top five countries of origin for investment in Indonesia, was no longer on the top investors list since five years.
"There are a number of new investors, including those from Qatar and United Arab Emirates, trying to go global. I'm sure they will be looking for new business opportunities here in the future, for example, in agriculture."
According to Alwi Shihab, special government envoy to the Middle East, in 2007 countries from the region invested some $2.55 billion in Indonesia through joint venture companies operating in infrastructure, chemical products and tourism.
Included in those projects were commitments from the Qatar Investment Authority and the Dubai-based Emmar group -- for the development of hotel and resort facilities worth $600 million in Lombok, with the PT Bali Lombok Tourism Development Center.
There is no official data yet for inward investment from the Middle East for this year.
But earlier this year, for example, a commitment agreement was signed by Ras Al-Khaimah (RAK), through its subsidiary RAK Investment Authority, which would invest a total of $1.3 billion in South Sumatra to build an integrated port at Tanjung Api-Api and a railway line from Palembang to Tanjung Api-Api.
Lutfi said that the country still needed to keep improving its business climate so as to suit incoming global investors, including those from the Middle East.
He admitted some of the country's regulations did not suit Middle Eastern investors' financial "culture" especially in relation to sharia financing -- something that neighboring Malaysia has managed to tap into.
"Emaar started with an initial investment of $600 million in Malaysia," he said. "But now, its investment has reached no less than $2.2 billion."
Referring to the expected impacts of the global crisis next year, Lutfi said he remained optimistic, predicting foreign direct investment would still grow by between 10.7 percent and 11.3 percent, compared to this year, to reach well over US$16 billion.
According to the BKPM, realized inward investment hit $14.2 billion in from January to November this year, higher than the full-year target of $9.92 billion.