Back to Blogs

ICOR to be improved in the future

The Investment Coordinating Board (BKPM) targets improving the Incremental Capital Output Ratio (ICOR) through the Job Creation Law owing to persistent relatively high ratio than several Southeast Asian countries to encourage investment flows into Indonesia. ICOR, or Indonesia's additional capital ratio, currently reaches 6.8 percent or higher than Malaysia's 5.4 percent, the Philippines at 4.1 percent, or even Vietnam at 3.7 percent.

The higher the ICOR of a country, greater are the economic costs estimated that will erode the capital of business actors. Infrastructure development conducted by the government will also reduce the logistics costs. There will be improvements in the Job Creation Law, for the location permit will be based on spatial planning. On the basis of the regional spatial planning, this will accelerate location permits.

Investment realization as of September 2020 had reached Rp611.6 trillion, or 74.8 percent of this year's targeted Rp817.2 trillion. Of that figure, investment outside Java -- Sumatra, Kalimantan, Sulawesi, and Eastern Indonesia -- had reached Rp301.4 trillion, or 49.7 percent of the investment realization.The BKPM is targeting investment realization to reach Rp4,983.2 trillion for the 2021-2024 period, with target set for 2021 at Rp854.5 trillion.

(source: Antara news)