BKPM Talks about Weakening Energy Investment

The prediction of the Investment Coordinating Board (Badan Koordinasi Penanaman Modal) regarding the realization of direct investment in Indonesia throughout 2018 will reach Rp730 trillion. Not yet able to meet the investment target for 2018 which is pegged at Rp. 765 trillion.

“The 2018 investment realization target is IDR 765 trillion. Actually, in our second quarter, the National Development Planning Agency, Ministry of Finance, assessed that it was not realistic. It needs to be revised to Rp730 trillion,” said BKPM Head Thomas Lembong during a press conference at the BKPM Office, Jakarta, Tuesday (10/30).

According to Thomas, the condition of the global economy is in turmoil and with no breakthrough in investment policies made by the government. It will be difficult for the government to achieve the investment realization target.

“So we formally and in writing have informed the Head of Bappenas and the Minister of Finance, that in the middle of this year we will not be able to reach IDR 165 trillion with existing policies,” Thomas said.

With the revision of the investment realization target to Rp730 trillion so far this year, then when compared with the previous year’s investment realization, investment realization growth will only reach 5 percent.

“Last year our realization was IDR 693 trillion. So Rp. 730 trillion compared to Rp. 693 trillion, that’s five percent. But please keep in mind these values ​​are nominal, not yet cut inflation. If inflation is 3.5 percent, the real growth is only 1.5 percent,” Thomas said.

Energy Investment

The Energy and Mineral Resources (ESDM) sector has continued to decline over the past four years. In fact, the Joko Widodo Government has recently been driving investment, including in the energy sector. Based on data from the Ministry of Energy and Mineral Resources, 2014 the MEMR sector investment still managed to reach USD 33.5 billion. The investment comes from the oil and gas (oil and gas) sector of USD 21.7 billion, minerals and coal (mineral) USD 8.2 billion, electricity USD 3 billion, and Renewable Energy (EBT) USD 0.6 billion.

In 2015, the ESDM sector investment actually dropped to USD 32.3 billion. The investment continues to fall. In 2016 investment only reached USD 29.7 billion and last year only USD 27.5 billion. This year, the government does not want the decline to occur again. They target investment in the energy and mining sectors this year to reach USD 37.2 trillion. Early last year, the government was quite confident with the target.

Confidence is based on the trend of rising world oil prices. They believe these conditions will have a positive impact on investment. However, until the third quarter of 2018, the target is still far from the target. Investment realization is still far from the target they dreamed of. Because, until the third quarter of yesterday the realization of new investments reached USD 15.2 billion or around 40.86 percent of the target.

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