Jakarta (ANTARA News) - Foreign investors have began eyeing Indonesia as an investment destination besides China, India and Vietnam thanks to its increasingly stable economic and political conditions, Bank Indonesia (BI) Governor Burhanuddin Abdullah said.
"I think that the investment climate, political stability and macro economic conditions are getting better," he said on Friday.
Foreign investors would only invest in a country which offered more favorable opportunities, he said.
"I think Indonesia is one of the nations that must be taken into account thanks to its increasingly stable conditions," he said.
"Therefore, I am optimistic that the engine of economic growth in 2007 will be not only the government, the banking sector and exports but also foreign investment," he said.
Lack of legal certainty remains a major obstacle to attracting investments into the country.
In the January-November period of 2006 foreign investment fell by 45.91 percent from a year earlier.
Burhanuddin further said to enable domestic banks to carry out their intermediary function they needed to reduce credit risks and increase credit access.
"Why does the intermediary function not work? This is not because of liquidity shortages but because of their failure to reduce credit risks and increase credit access," he said.
He said the problem currently facing the banking sector was overhanging liquidity funds which reach more than Rp200 trillion. On the other hand, the real sector was in dire need of funds to run their business. (*)