Indonesian central bank sees FDI up by 42% in Y 2011

Indonesian central bank forecasted that foreign direct investment (FDI) this year would surge by 42% to US$14.5B this year, but it expected capital market inflows to fall as advanced economies recover, according to local media Saturday.

“The confidence about our economy has built up and we are glad to see this trend,” Budi Mulya, a deputy governor at the central bank, told the Jakarta Globe on the sidelines of a high-level conference on Asian inflows in Nusa Dua, Bali Friday.

But this year, the FDI growth will likely outpace capital market inflows as the US economy is returning to growth, meaning the money will fly back to safe-haven assets from riskier bets in emerging markets, he said, adding that but the Indonesian government much prefers direct investment to inflows to capital markets, which are far more liquid and easier to withdraw.

The capital inflow into Indonesia have increased sharply over the past 2 yrs. They fell to minus US$1.8B in Y 2008 during the Global financial crisis, but skyrocketed to US$26.2B last year as investors were drawn to high-yield assets.

Indonesia forecasted US$15.2B in stock and bond inflows in Y 2010, while direct investment was US$9.8B.—Paul A. Ebeling, Jnr. www.livetradingnews.com

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Posted by Shayne Heffernan on Mar 13th, 2011and filed underAsia, Latest News.You can follow any responses to this entry through theRSS 2.0You can leave a response by filling following comment form or trackback to this entry from your site