SINGAPORE: Indonesia's investment chief said on Wednesday (March 31) he expected foreigners to be allowed to own apartments in Indonesia by the third quarter of this year, giving the country an additional source of foreign capital inflows.

"The thinking is anything above a certain floor you can buy... anything that is closer to the ground has political sensitivity," said Gita Wirjawan, head of Indonesia's investment agency, in an interview with Reuters.

Currently foreigners can only buy property in Indonesia through a nominee or via a local Indonesian firm, putting the buyer at increased risk.

Asian property prices have been booming on strong investor interest and low interest rates, leading to fears of bubbles in some countries, though Wirjawan said Jakarta prices were undervalued versus Singapore and Vietnam's Ho Chi Minh City.

Wirjawan, a former investment banker with JP Morgan and Goldman Sachs, was on a trip to Singapore to promote investment.

He said he was hopeful that within the next year, give or take a few months, the country would be able to reform land laws and inflexible labour market laws, which he said were two of the biggest obstacles to increasing foreign direct investment (FDI).

He said investment had picked up in the first quarter from a year ago, leaving him confident of reaching a target for increasing FDI by 15% in 2010.

FDI, being watched by sovereign rating agencies as a barometer for whether Indonesia can increase fiscal stability and achieve an investment grade rating, fell 27% to US$10.8 billion (RM35.29 billion) last year during the financial crisis.

Wirjawan said Coca Cola was planning to open more plants to tap growing consumption in Southeast Asia's biggest economy, but declined to name other potential investors. -- Reuters