The Capital Investment Coordinating Board (BKPM) is being reported by Antara News as setting this year's investment targets at IDR 792.3 trillion (USD 56 billion), which is almost 10% higher than 2018's IDR 721.3 trillion (USD51 billion).

This target covers 55 percent foreign and 45 percent domestic investments.

Business as usual

Head of BKPM, Thomas Trikasih Lembong, is optimistic investment will rebound after the April elections, owing to high market expectation on stability and continuity. "We still have 7.5 months after the voting day for the investment sector to recover from the pre-election slowdown," he said during a recent discussion with foreign investors.

Terje Nilsen, Principal of Harcourts Seven Stones, believes BKPM's high targets for 2019 are a reflection that business confidence is high and a Jokowi re-election is likely. "It's business as usual," he says. "There are a few larger developers that have announced they're waiting for election results but this could also be connected to the government being slow to update property tax values, which will also make investors hold back."

KrAsia are also upbeat, reporting elections will have little effect, regardless of who wins, and investments will remain stable, especially investments in technology and the country's digital industry, which already account for up to 20% of all foreign direct investment.

More investments - more jobs

BKPM say the five largest foreign investors in Indonesia are Singapore (USD 9.2 billion, 31.4 percent); Japan (USD 4.9 billion, 16.7 percent); China (USD 2.4 billion, 8.2 percent); Hong Kong (USD 2.0 billion, 6.8 percent); and Malaysia (USD 1.8 billion, 6.2 percent).

Acting Deputy for Investment Control at BKPM, Farah Ratnadewi Indriani told local news wires the realization of investment in the fourth quarter of 2018 was responsible for creating over 250,000 jobs while the total number of jobs created through last year was just shy of 1 million.

Online Single Submissions growing

BKPM is now responsible for something called OSS or the Online Single Submission service, which was introduced last year in efforts to cut lengthy bureaucratic procedures and centralize and simplify business registration and licensing systems across the country.

According to recent figures released by BKPM and OSS, 1,239 business registration numbers (NIB) per day were issued during the period of January 2-11, 2019. This translates to almost 8,900 domestic investments, over 540 small and medium scale enterprises (SMEs) and almost 490 foreign investments.

What a Jokowi victory could bring

According to Barrons, a Jokowi victory in April's elections will likely result in two investment themes dominating his second term: 1) rebuilding infrastructure and, 2) gaining a bigger share of foreign direct investment in Asia, which some observers such as Manu Bhaskaran from Centennial Asia Advisors in Singapore, believe would mean pursuing "unpopular but necessary policies such as labour market reforms.”

How does this impact Bali's real estate industry?

Dominique Gallman, Owner of Exotiq Property Bali believes a new president could slow investment sentiment down. "If a new president is elected, it will have an impact as new administrations tend to change the policies of the former government and that alone always creates uncertainty and disruption. It will not be different this time if Prabowo wins. Whether, at the end of the day, the new administration will be more business friendly or not is hard to say but investors take that 'wait and see' position before making big decisions and this will also be felt in the property markets."

Real Estate and Tourism

Nilsen however, has a more optimistic forecast as he thinks Jokowi's impact over the last five years has been positively profound. "Another term will bring Indonesia closer to a tipping point of no return as the country continues to push forward on its quest to become the world's fourth largest economy," he told WILLIAMS MEDIA. "And we need to remember real estate and tourism are very closely connected, especially in Bali, so with the current drive to make tourism the country's largest foreign exchange earner, the future for the real estate industry in Bali and beyond looks bright.

Indonesia`s International Investment Position (IIP) was reported as being reasonably stable in the third quarter of 2018, recording a net liability of USD 297 billion, or 28.5 percent of the gross domestic product, a figure that remains relatively unchanged from Q2 according to Bank Indonesia (BI).

Sources: Antara News, Merdeka, Bank Indonesia, Barrons, KrAsia, BKPM, Industry, Kompas, Coordinating Ministry For Economic Affairs, Indonesia Investments. MedCom, Media Indonesia

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