Indonesia FDI reach $5.9b in Q2

Most of the inflows are concentrated in mining and base chemicals.

OCBC Treasury Research noted:

While the latest FDI data means that total FDI for 2012 is on course to hit a record-high USD 20bn, we would caution that some moderation maybe seen given what’s happening in the global economy.

As it is, about 15% of total FDI into Indonesia for the past 5 years have originated from Europe, and thus, we would expect some softening of flows from the region amidst the current crisis and the expected deleveraging accompanying it – this is a similar rhetoric expressed by many government officials in recent months.

Nevertheless, we expect total FDI to still amount at least USD 17bn for the full-year, about double of the projected current account deficit for the country in 2012.

This strength in FDI flows, not surprisingly, is crucial for Indonesia’s flows perspective at times of market volatility and a marked deterioration seen in the trade account.