Indonesia ranked the fourth of the top five countries to receive the most Foreign Direct Investment (FDI) in East and Southeast Asian region in 2012, according to a recently published 2013 World Investment Report compiled by the United Nations Conference on Trade and Development (UNCTAD).
Indonesia received a total of 20 billion U.S. dollars of FDI in 2012, ranking the fourth just after China, China's Hong Kong, Singapore but before Malaysia. The FDI figure was similar to what the country got in 2011 when Indonesia was also put in the fourth place.
In regional term, the ASEAN countries saw a 2 percent increase of overall FDI inflow last year with Singapore having the largest part of 1.3 percent increase (57 billion U.S. dollars), the report said.
The UNCTAD report disclosed worldwide on Wednesday also noted that FDI inflow in Cambodia, Indonesia, Myanmar, the Philippines and Vietnam continued to grow last year. Those countries received an increasing amount of FDI driven by the wish of investors to reduce costs for labor-intensive manufacturing, harvest mineral resources and participate in infrastructure projects.
It was seen in China's investment in infrastructure projects in Indonesia and Lao People's Democratic Republic that provided new dynamism to intraregional FDI in infrastructure.
In global term, the UNCTAD learned that global FDI inflow fell by 18 percent to 1.35 trillion U.S. dollars last year. Recovery to more vigorous investment levels will take longer than expected due to global economic fragility and policy uncertainty.
Developing countries apparently took the lead in attempting FDI last year as they, for the first time, took more FDI than developed countries. It accounted for 52 percent of global FDI inflows, the report said.
Indonesian analyst from the University of Indonesia (UI) Faisal Basri said that most of the FDI in Indonesia was invested in the sectors of manufacturing, telecommunications, automotive, electronics and pharmaceutical industries.
With positive economic parameters and economic potentialities, he said, that Indonesia would still be a promising investment ground for the investors.
He estimated that Indonesia, the largest economy in Southeast Asia region, will see positive impacts from the much-expected growing FDI in 2014 to 2015.
"It would be reflected in manufactured goods exports," Faisasl said in an economy discussion session held in the UN office here to disclose the UNCTAD report.
He said that Indonesia should take the opportunity from the FDI as it would create jobs, make more value-added products and improve the country's competitiveness.
"Indonesia should no longer be merely market ground for foreign products. With improving competitiveness, it can be production base for exports," he said.
With over 240 million population and a 6 percent economic growth rate in the last few years, Indonesia has great economic potential. Its demographic structure is dominated by young people, making the country lucrative offer for investors up until 2030, Faisal added.
On the same occasion, Chairman of Indonesia Employers Association (Apindo) Sofyan Wanandi said Indonesia has to maintain such a great momentum that allows the country to attain higher growth in the future.
He, however, reminded the government to take more serious efforts in improving legal certainty. He said the decentralization governing system has loopholes that risks certainty and it would eventually causing problems for business people and investors intending to start their business in the regions.
"The decentralization had made regulation for business less synchronized. It had made us frustrated as regulations applied by each regional government different from one another. The government should pay higher attention and make improvement on this issue as it may risk cancellation of investors intending to invest in the region," Sofyan said.
