ASEAN KEY DESTINATIONS
IFC, a member of the World Bank Group, sees attractive investment opportunities in Indonesia in the long-term, despite investors recently withdrawing funds from Indonesia. IFC's own investments in Indonesian companies jumped almost 50 percent in fiscal year 2013, which ended in June, from a year earlier to support infrastructure upgrades and improve financial access in the country.
Indonesia is going through a difficult period with slowing growth, the weakening of the Indonesian rupiah and rising inflation. To address long-term competitiveness, the government has made infrastructure a top priority and much of the needed investment will have to come from the private sector. To support the government to achieve its goals, IFC significantly increased its private sector investments to $438 million in fiscal year 2013, from about $300 million in the previous year.
"During challenging times, IFC will step in as needed to support the private sector, which can help Indonesia's economic growth," said IFC Vice President for Asia and the Pacific Karin Finkelston. "Our record investment and advisory projects in fiscal year 2013 underlines our commitment to working with the private sector to increase infrastructure development and expand access to finance in Indonesia."
One of the much-needed infrastructure upgrades is the improvement of access to clean water, to meet the growing demand from urbanization. IFC helped provide clean water for about 1.8 million residents in the fast-growing city of Tangerang, by making its first investment in and arranging financing for water services company PT Moya Indonesia.
Trade and investment between emerging markets are important for tapping new sources of funds for developing economies. IFC supported the expansion of PT Indo-Rama Synthetics Tbk, an Indonesian-based yarn manufacturing company, and Wings Corp., a food, beverage and household cleaning products company, into Africa.
To help more poor people benefit from Indonesia's economic growth, IFC invested in PT Mitra Bisnis Keluarga Ventura, a leading microfinance institution in Indonesia, to increase lending to women entrepreneurs in rural areas so that they can grow their businesses and create more jobs. IFC also assisted Bank Indonesia to establish guidelines for its designated agents - people who are authorized to conduct certain transactions - to expand banking services in rural areas.
One of IFC's strategic focuses is to empower women, who are key players in sectors such as agribusiness. Working with PT IndoCafco Indonesia, IFC engaged more women, who make up 80 percent of coffee farmers in North Sumatra, to participate in training. After teaching the farmers good agricultural practices, an IFC survey found that the productivity level of training groups comprising both men and women jumped 102 percent, while the men-only groups reported an 87 percent increase.
"IFC remains committed to supporting Indonesia's economic development," said Sarvesh Suri, IFC's country manager for Indonesia. "We will continue to extend the reach of infrastructure, help the private sector improve its competitiveness, promote sustainable business practices, and expand financial services to more people so that the poor can also benefit from the country's economic growth."
Most of IFC's investment in Indonesia, or $336 million, went to manufacturing, agribusiness and services companies, $58 million was in the infrastructure sector and $44 million in the financial markets sector in fiscal year 2013. IFC's total investments in East Asia Pacific for the fiscal year reached a record $3.4 billion in 83 projects, up around 15 percent from fiscal year 2012. Indonesia ranked third, after China and Vietnam, in terms of IFC's investment volume in the region.
IFC's investment and advisory work over the past year shows commitment to strengthening the role of the private sector in achieving the World Bank Group's goal of eliminating extreme poverty by 2030 and promoting shared prosperity among the poorest 40 percent around the world.
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