Investment Realization into Indonesia Grows Slightly in Q2 2023

  Indonesia recorded a total investment realization of Rp349,8 trillion (US$23.27 billion) for the
  second quarter of 2023, the Minister of Investment and Head of the Indonesian Investment
  Coordinating Board (BKPM) Bahlil Lahadalia said in a press conference on Friday, July 21. 

  The investment realization for the April to June period was a 15.7 percent rise over the same
  period last year and a 6.3 percent increase over that of the first quarter of 2023. 

  The realization of domestic direct investment (PMDN) in the second quarter of 2023 reached
  Rp163,5 trillion, an increase of 7.6% compared to the previous quarter or 17.6% compared to
  the same quarter last year. The largest contributors to domestic investment were the sectors of
  mining, housing, food, transportation, and electricity, gas and water. 

  For foreign investment (PMA), the realization value reached IDR 186.3 trillion for the second
  quarter of 2023, a growth of 5.2% from the last quarter or 14.2% compared to the same quarter
  last year. The sectors of base metals, transportation, pharmaceuticals, mining, and housing were
  the most explored by foreign investment. 

  "The growth of foreign investment realization proves that Indonesia is still one of the main
  destinations for investors to invest their capital. Moreover, even though most of the investment
  still comes from foreigners, domestic investment is quite significant and even has higher growth",
  Mr. Lahadalia said. 

  West Java is the province that received the most realization of investment in the second quarter,
  with a total revenue of Rp 53.7 trillion, followed by DKI Jakarta (Rp. 43.0 trillion), East Java (Rp.
  31.1 trillion), Central Sulawesi (Rp. 26.6 trillion), and Banten (Rp. 24.9 trillion). 

  Not much different from the previous quarter, Singapore remained the largest contributor with a
  realized investment of $3.4 billion. China ranked second with $2.6 billion, followed by Hong Kong
  with $2.0 billion, Japan with $1.0 billion, and Malaysia with $0.8 billion. 

  Source: Business-Indonesia

  Indonesia surprises with large trade surplus; rate cuts eyed before
  year-end 

  Indonesia recorded a surprisingly large trade surplus of $3.46 billion in June, as imports plunged
  more than expected and exports also remained weak, official data showed on Monday, adding to
  the case for possible rate cuts before year-end. 

  A Reuters poll of economists had expected a surplus of $1.35 billion last month. The country
  recorded a surplus of around $440 million in May. 

  However, the resource-rich country's overall trade surplus in the first half of 2023 remained some
  $5 billion below last year's. Indonesia's January-June trade surplus stood at $19.93 billion, data
  from the statistics bureau showed. 

  Analysts expect the surplus in merchandise trade for Southeast Asia's largest economy to narrow
  this year as exports soften amid declining prices of its top commodities, including palm oil, coal
  and nickel, and weakening global demand. 

  Exports slumped 21.18% on a yearly basis to $20.61 billion in June, deeper than the 18.85% fall
  expected in the poll. 

  Shipments of coal and palm oil suffered the biggest drop. 

  Imports were down 18.35% on a yearly basis to $17.15 billion, compared with the poll's forecast
  of 7.75% contraction with purchases of raw materials falling the most. 

  The data suggests the central bank has room to cut interest rates before the end of the year, said
  Fakhrul Fulvian, economist with Trimegah Securities. 

  Trimegah predicts Bank Indonesia (BI) will cut rates by 50 basis points this year, assuming
  Indonesia runs a current account surplus equivalent to 0.3% of GDP in 2023. 

  BI raised rates by 225 basis points between August to January to fight rising inflationary
  pressures. 

  Inflation has since cooled to within the bank's target range, prompting calls from some economists
  for policy easing, but nearly two-thirds of respondents in a mid-June Reuters survey of analysts
  still predicted BI will keep rates steady for the rest of the year. 

  BI's next policy review is scheduled for July 24-25. 

  Source: Reuters

  China's Xinyi to Invest $11b in Quartz Sand Industry in Batam 

  Chinese glass giant Xinyi Group seeks to make an $11 billion investment in the quartz sand
  downstream industry that lies in Rempang eco-city in Batam, Riau islands, according to
  Investment Minister Bahlil Lahadalia. 

  Bahlil earlier this week flew to China to meet potential investors, among others, Xinyi Group,
  which produces automobile glass and solar panels, to name a few.  

  “I consider Xinyi as one of the world’s leading industrial players. If God is willing, they will make
  an investment in Rempang,” Bahlil was quoted as saying in a press statement on Wednesday. 

  During his trip, the minister sought to show Indonesia’s intention to capture more added value out
  of its commodities by processing the raw materials domestically. The downstream industry for
  nickel is already in progress, and the resource-rich country is now working on expanding it to
  other commodities. 

  “We have quartz sand, silica. But all this time, we have exported them in unprocessed forms.
  Developing a glass and solar panel ecosystem is part of our efforts to drive industrial downstream
  in the quartz sand sector,” Bahlil said. 

  Xinyi Group encompasses Xinyi Glass and Xinyi Solar. According to Gerry Tung, the chief
  executive officer of Xinyi Group, Indonesia’s improved climate investment and robust economic
  potential prompted the company to invest more in Indonesia. Xinyi at present has invested in a
  production plant in Gresik's JIIPE industrial park. 

  “Over the past years, we have seen how great the investment [climate] in Indonesia is. Many
  things have changed. We have invested in Gresik and seeing its growth prompted us to go for
  other industries, including Batam,” Gerry said. 

  Last year, Xinyi Glass inked an agreement with JIIPE developer BMKS for the purchase of a
  large land plot in the industrial park. The Chinese glassmaker also signed a deal with BMKS on
  the installation of water and electricity to support its plant’s construction and operations. 

  China is Indonesia’s second-largest foreign investor with an accumulated total investment of
  $24.55 billion from 2018 to Q1-2023, the government reported.  

  China mostly invested in Central Sulawesi ($6.88 billion), West Java ($5.21 billion), North Maluku
  ($3.83 billion), Jakarta ($1.74 billion), and Banten ($1.45 billion).  

  Chinese investments also mainly went to basic metals ($8.61 billion); transport, warehouse, and
  telecom ($6.69 billion), electricity, gas and water ($2.75 billion). Followed by real estate, industrial
  parks and offices ($1.74 billion) as well as chemical industries ($1.95 billion). 

  A government roadmap shown by the Investment Ministry earlier this year revealed that the
  country would prioritize driving downstream across 21 commodities like coal, bauxite, salt, and
  seaweed, among others, over the next few decades. Developing the downstream industries
  across all these commodities, however, would need an investment of $545.3 billion until 2040. 

  Source: The Jakarta Globe