Foreign direct investment (FDI) into Indonesia surged 19.6% on a yearly basis in the second quarter in rupiah terms, the country’s investment ministry said on Tuesday, the highest rise in over five years.
Total FDI in April-June stood at 116.8 trillion rupiah ($8.06 billion), excluding FDI into banking and the oil and gas sector. The second-quarter FDI growth was the strongest since the fourth quarter of 2015, according to Refinitiv data.
With domestic investment, total direct invest in the second quarter stood at 223 trillion rupiah, up 16.2% from a year earlier.
Minister Bahlil Lahadalia told a news conference business has become accustomed to the coronavirus pandemic, which helped spurred investment flows into Southeast Asia’s largest economy.
However, Bahlil noted rising COVID-19 cases and stricter coronavirus curbs beginning in July will likely affect the third quarter FDI numbers.
“The challenge in the third quarter will be huge, because we’re seeing a surge in COVID-19 cases,” he said, adding that his ministry was formulating a strategy to make sure its investment target for 2021 could be reached.
The ministry aims to attract total direct investment of 900 trillion rupiah this year, from domestic and foreign sources. In the first half of 2021, 49% of the target had been reached.
Investors have made commitments for later this year, including a 5.2 trillion rupiah investment by U.S. agribusiness giant Cargill Inc with ground breaking expected in October or September, Bahlil said.
The minister did not provide more details and the company did not immediately respond to request for comment. Cargill announced last month a $200 million investment in palm oil refinery.
In the second quarter, Singapore, China and Hong Kong remained among the top five biggest investors.
The Netherlands rose up the ranks to the third place, which Bahlil said was due to the country becoming a hub for investment from the European Union following Brexit.
The biggest beneficiaries were metal processing and mining sectors, followed by the transportation, warehouse and communication sector and utilities.
($1 = 14,485.0000 rupiah) (Reporting by Gayatri Suroyo and Tabita Diela; Editing by Tom Hogue and Sam Holmes)