World Economy

Indonesia may see up to $200 billion in investment after S&P upgrade: Minister

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Southeast Asia's largest economy could enjoy as much as $200 billion in future investment following a credit ratings upgrade by S&P Global Ratings, Indonesia's Minister of National Development Planning Bambang Brodjonegoro told CNBC on Wednesday.

"Now that we have this investment grade rating, I believe there's more than $100 billion or $200 billion in potential investment, not only in government bonds but also stocks and corporate bonds."

Out of the three leading rating agencies, S&P was the last to deem Indonesia's sovereign ratings as investment grade. The firm had long denied Jakarta the coveted status amid concerns over weak government revenue collection but in a decision last month, S&P finally changed its tune, citing reduced fiscal risks. Countries with higher ratings typically enjoy cheaper borrowing costs.

"During my days as finance minister, I remember when we visited some investors, they always asked when we would be getting investment grade from S&P," Brodjonegoro said on the sidelines of the Nomura Investment Forum in Singapore.

A teller at a money changer handles Indonesia rupiah bank notes in Jakarta, Indonesia November 11, 2016.
Darren Whiteside | Reuters

There are certain funds waiting to come to Indonesia but who were previously unable to due to internal rules that required investment-grade status from Fitch, Moody's and S&P, he explained.

A former finance minister, Brodjonegoro entered his new job in October 2015 following President Joko Widodo's cabinet reshuffle that appointed Sri Mulyani Indrawati as finance head.

Japan as well as Middle Eastern funds could be sources of future investment, Brodjonegoro noted.

Indonesia has good relations with Middle Eastern countries and in light of the current diplomatic crisis between Qatar and leading Arab governments, Jakarta encourages the parties to engage in constructive dialogue, he stated.

As a net oil importer, Indonesia will be monitoring the impact of the dispute on crude prices and calculate the effect on domestic fuel costs, Brodjonegoro said.