As a follow up to the efforts Indonesia made during the World Islamic Economic Forum (WIEF) in October, Muhammad Lutfi, chief of Indonesian Investment Coordinating Board (BKPM) called for investments from the Gulf as capital inflow to the country had reduced from other regions due to global economic crisis.
A government official stated that the country was targeting increased investments in agricultural sector from the GCC states since they were also diversifying their business beyond oil by seeking arable foreign lands to cultivate for their food supplies. Lutfi claimed that the Middle Eastern investors had reaped a bonanza of about $1.6 trillion owing to high oil prices as of August, but did not speak of crude hitting a 4 year low in recent days.
The figures given by Alwi Shihab, a special envoy to the Middle East suggests that in 2007 countries from the region especially the UAE and Qatar have invested around $2.5bn in Indonesia through joint venture companies operating in infrastructure, chemical products and tourism. Though investments from the US which was one of the top five investing countries has considerably decreased in last five years, the country is expecting to compensate through other prospective regions.
According to BKPM data, capital inflow during the period spanning January to November this year was $14.2bn which is higher than the whole year’s target of $10bn. Lufti stated that he was optimistic despite the global meltdown, and expects the country to attract investments in excess of $16bn in 2009.
Lufti added that the country had to modify foreign investment regulations to suit the Gulf investors whose deals are largely based on Islamic financial laws. He commended Malaysia for striking common ground with the Middle Eastern investors by setting up congenial investment climate. The fifth WIEF which will be held in Jakarta from March 1 to March 4, 2009, Indonesia is likely to give another push to this call in the forum.