Davos, Switzerland. Indonesia's National Investment Coordinating Board (BKPM) said it expected investment to grow by some 15 percent in 2014, or from about Rp 398 trillion ($32.64 billion) to between Rp 456 and 457 trillion.

"Our economic growth this year is expected to be at around 5.8 percent, and this is quite good," BKPM head Mahendra Siregar said on Wednesday at the World Economic Forum in Davos, Switzerland.

Mahendra said that more infrastructure needed to be built to avoid bottlenecks and inefficiencies in production that could harm investment.

The processing industry would see rising investment, he said, due to government efforts to curb the export of raw materials and commodities. Indonesia's raw mineral export ban has prompted companies to invest a total of Rp 150 trillion in smelters.

Investment in biodiesel production from palm oil was also expected to rise, Mahendra said, but he did not cite specific figures.

The government banned the export of raw palm oil, cacao and rubber four years ago despite criticism that the policy would cause heavy losses for the country due to a lack of processing facilities.

"In [Thursday's] WEF session, we will report that after 3.5 years, the cacao processing capacity jumped from 100,000 tons to more than 400,000 tons," Mahendra said. "It is true that we no longer can export cacao but this is because it is fully consumed domestically, not because the cacao became more expensive and could not be sold."

The four-day WEF is held annually in Davos. It provides a forum for networking between business leaders and policymakers from around the world.

Mahendra said that the BKPM had thus far issued smelting building permits to 28 companies, three of which will complete smelters this year in order to process bauxite, nickel and iron ore.

In the palm oil sector, downstreaming would be encouraged by a drive to use biodiesel domestically, he said. At present, palm oil is usually exported in crude form.

"The supply chain, back and front, should also be rearranged, because if not there will be no sustainability," he said. "If the cacao plantations are not reordered, in two years we will have to import cacao beans even if our downstreaming drive is successful. It is the same with [crude palm oil] and in mining."

He said consistent policy was the key to developing Indonesia's processing capabilities.

"Those top world enterpreneurs may already know it, but if it is explained to them directly in a forum such as the WEF that we are implementing policies in a consistent manner, they will believe it more," he said.

By ID/Ester Nuky (thejakartaglobe.com)

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