Jakarta. Investment in Indonesia slowed in the first quarter this year as foreign direct investment cooled down, new data suggest.

Southeast Asia's largest economy reported a 14.6 percent increase in investment to Rp 106.6 trillion ($9.17 billion) from Rp 93 trillion in the same period last year, which suggests that the investment figure may have leveled out now that Indonesia has started from higher base.

The 14.6 percent growth was lower than the 26.4 percent and 27.3 percent increases reported in the fourth and third quarters of last year. In dollar terms, the amount of investment fell by about $100 million due to the sharp depreciation of the rupiah.

Domestic direct investment grew 25.9 percent to Rp 34.6 trillion, which helps to offset the meager 9.8 percent growth in foreign direct investment.

Mahendra Siregar, the chairman of the Investment Coordinating Board (BKPM), said that the goverment's priority is to keep the quarterly investment realization to hover at around Rp 100 trillion.

Mahendra said that the slower growth did not reflect that investors were losing appetite for Indonesia as the amount of investment was still at a record high. "The nominal figure has surpassed Rp 100 trillion for three straight quarters. For us now, the most important thing is that the [nominal amount] is large and it can be sustained," he said.

Furthermore, the new record of investment this quarter suggests that investors remain upbeat on Indonesia despite the change in government after July's presidential election, according to Mahendra.

"[That shows] that investment decision was not based on a certain day, month or year, but on the expectation of economic and politic stability," he said.

"From what we heard, the election actually yielded positive reactions."

The mining sector returned as the favorite of foreign investors due to high interest in coal, accounting for 24 percent of the total Rp 72 trillion invested by foreign businesses, followed by food industry and land transportation. Domestic companies invested Rp 34.6 trillion in the first quarter, 32.8 percent of which went to electricity, water and gas.

Around Rp 75.4 trilion was in the form of new projects while the remaining Rp 31.2 trillion was for expansions.

The number of new employment created from the investment was 260,156, down from 361,924 from the previous year, which marks the shift to capital-intensive sector from labor-intensive industries.

Mahendra said that the investment trend in Indonesia was expected to continue over the coming years.

Foreign investment forms a major part of Indonesia's economy. Last year it accounted for 31.66 percent of Indonesia's gross domestic product.

Data from the BKPM exclude information from the oil and gas, financial services and banking industries.

By Tito Summa Siahaan - thejakartaglobe.com

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