BALANCE OF PAYMENTS and FOREIGN DIRECT INVESTMENT IN

INDONESIA Nahdy Niza Mustafa

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INDONESIA BALANCE OF PAYMENTS CONCEPTUAL FRAMEWORK DEFINITIONBalance of payments is a summary of statements or statements

which basically say all transactions made by a resident of a country with residents of other countries and all of them are recorded in a certain period, usually a calendar year. (Salvatore, 1997: 67)

Balance of payments is a systematic document of all economic transactions between residents of a country with the population of another country within a specified period, usually one year. (Apridar, 2009: 135)

Sukirno (2004: 390), defines the balance of payments as a financial flow records that show the value of trade transactions and the flow was conducted among a country with other countries in a given year.

From the various definitions above, it can be concluded that the balance of payments is a systematic record that includes international transactions of a country with the population of another country in a given period is usually one year.

The purpose of the Balance of PaymentsPreparation of the balance of payments has

several objectives, including the following:As the material information to the

government about the international position of the country concerned.

As the material for the government to make decisions in the field of trade policies, payments affairs.

As the material to assist the government in making decisions in the field of monetary and fiscal policy.

The function of the balance of payments As an accounting tool and means of payment

abroad for the government to take a decision, whether the state can resume the entry of foreign goods and be able to complete the payment on time.

As a tool to explain the influence and abroad transaction on national income.

As a tool to measure the state of the economy in international relations of a country.

As a tool of monetary policy which will be implemented by a country.

International Economic tradesInternational economic transactions according Reksoprayitno

(1995: 56), is an economic transaction conducted by a resident of a country that has a balance of international payments. Just like the other balance-sheet and in accordance with accounting principles generally, the balance of payments records transactions plus and minus. The plus transaction is called a credit transaction (credit), whereas the minus transaction called debit transactions (debit).

In the balance of payments, which contains posts debit transactions are usually marked with a sign (-). While the credit transaction occurs when a transaction creates or lead to increased rights for residents of other countries or result in reduced liability for the residents of the country's balance of payments to hold payments to residents of other countries, this transaction is usually marked with a plus sign (+).

CONCEPT OF TRANSACTIONIn general, economic transactions are included

in the balance of payments can be divided into two groups:

(1) Goods, services, revenue (income) and current transfer;

(2) Capital / financialTransactions within the group (1) are part of

the current account, while transactions in the group (2) are part of the capital and financial accounts.

CONCEPT OF TRANSACTIONRecording Transaction PeriodDual Entry SystemErrors and OmissionsTransaction valuationCalculation and Conversion Unit

CONCEPT OF RESIDENCY / POPULATIONIn the balance of payments statistics, the

population of Indonesia is composed of:(1) Government agencies(2) The financial institution and non-financial

institution which includes all companies involved in the production of commercial goods and services in the territory of Indonesia.

(3) Non-profit organizations(4) Households and individuals, that all the

people living in the territory of Indonesia for one year or more and the center of economic interests in Indonesia.

CLASSIFICATION STANDARD BALANCE OF PAYMENTSClassification standard balance of payments consists of

two main groups of the balance sheet: Current account and Capital and financial accounts. Transactions are classified into current account

consists of goods and services , revenue (income) and current transfers.

Transactions are classified into capital account consists of capital transfer transactions (capital transfers) and net acquisition or disposal of non-renewable non-financial assets (acquisition or disposal of non-produced, non-financial assets).

BALANCE OF PAYMENTS INDONESIA PRESENTATION FORMATIndonesia's Balance of Payments: SummaryIndonesia’s Balance of Payments: Current

AccountIndonesia Balance of Payments: Capital and

FinancialIndonesia Balance of Payments: Government

Sector and the Monetary Authority Financial Transactions

Indonesia Balance of Payments: Private Sector Financial Transaction

Indonesia's Balance of Payments: Summary

Indonesia’s Balance of Payments: Current Account (Goods)

Indonesia’s Balance of Payments: Current Account (Services)

Indonesia’s Balance of Payments: Current Account (Income)

Indonesia Balance of Payments: Capital and Financial

Indonesia Balance of Payments: Government Sector and the Monetary Authority Financial Transactions

Indonesia Balance of Payments: Private Sector Financial Transaction

DIRECT INVESTMENT (Foreign Direct Investment)International/Foreign direct investment is an investment

made by a resident of a country (shareholders / direct investor) in an investment company directly (direct investment enterprise) in other countries for the long term.

Direct Investment Company is a company incorporation (incorporated) or non-incorporation (unincorporated) which is 10% or more of its shares (or equivalent for non-incorporation) is owned by foreign shareholders. The company consists of: subsidiary (subsidiary, shareholders owning more than 50% of shares), associations (associate, shareholders have between 10% to 50% of the shares), and branch (branch, the company non-incorporation).

Examples of Direct Investment Relationships

CLASSIFICATIONThe main classification of direct investment is

based on the direction of investment. Direct investment made by Indonesian people abroad called direct investment abroad (direct investment abroad or outward direct investment) and investments made by direct investors abroad on companies in Indonesia called direct investment in Indonesia (direct investment in Indonesia [or commonly known as the Foreign Direct investment - FDI] or inward direct investment).

Sectors that can not be entered by FDIBusiness sectors closed to foreign investment in full control

are areas that are important for the state and serving the public, according to Article 6 “UPMA” is as follows:

PortsProduction, transmission and distribution of Electricity to

the publicTelecommunicationCruiseFlightWater providerPublic railAtomic power plantMass media.

Indonesia’s Direct Investment Data (1) Internal Data Bank Indonesia include:

(a) Report of Foreign Exchange for Direct Investment Abroad transaction data;

(b) Commercial Bank Monthly Report for data transactions and equity capital direct investment position in Indonesia's banking sector;

(c) Report Information System External Debt (whistle) to the data of foreign debt between affiliated companies; and

(d) the results of the survey direct investment in equity capital position data;

(2) BP Migas, to the data of direct investment in the oil and gas sector; (3) Ministry of State Enterprises, for data privatization; (4) Asset Management Company (PPA), for data privatization or other

state assets, and (5) The National Committee for the Acceleration of Infrastructure

Provision (KKPPI), the data related to the investment in the infrastructure sector.

Investment Realization Progress Quarter I 2015

Investment Realization in Quarter I 2015 Compared to The Same Periodin2014: DDI and FDI; Java and Outside Java

Economic Corridor

Investment Realization in Quarter I 2015: Based on Sector

Investment Realization in Quarter I 2015: Based on Location

Investment Realization in Quarter I 2015: Based on Country of Origin

Indonesian Labor Absorption Progress 2010–March 2015: Per Quarter

Progress of Investment Realization 2010–March 2015: Per Quarter

THANK YOU FOR YOUR ATTENTION!