BKPM expects no sharp falls in foreign direct investment<\/p>\n
JAKARTA (JP): The Investment Coordinating Board (BKPM) expects
\nno significant drop in foreign direct investment this year,
\ndespite a sharp fall in the last four months.<\/p>\n
BKPM deputy chairman Sugihono Kadarisman said on Friday
\nforeign investment was likely to stay unchanged at about the same
\nfigure as last year -- US$13.6 billion.<\/p>\n
He was optimistic foreign investment would pick up in the
\ncoming months, given the improvement in Indonesia's economy and
\nthe better than expected outlook for the general elections which
\nwill be held on June 7.<\/p>\n
Electoral campaigns, which started two weeks ago, have run
\nsmoothly, with no reports of major unrest as earlier feared.<\/p>\n
Kadarisman said many foreign investors had expressed an
\ninterest in expanding their business in Indonesia, but that they
\npreferred to wait until the country's political conditions
\nstabilized.<\/p>\n
\"Despite the slow investment inflow in the first four months
\nof this year, we are optimistic that we will see an influx in
\nforeign investment approvals in the six-month period after the
\ngeneral election,\" he said.<\/p>\n
He said foreign direct investment approvals during the first
\nfour months of this year amounted to 279 projects worth $935
\nmillion, down 80 percent from the same period last year.<\/p>\n
He said most of the projects were in the agribusiness and
\nfishery fields.<\/p>\n
\"They realize that exports of agriculture commodities have
\ngreat potential and that Indonesia is one of the best places for
\nsuch investment.\"<\/p>\n
Sugihono said the general election, the first democratic
\nelection since 1955, would be a determining factor for the return
\nof foreign investors to Indonesia.<\/p>\n
\"If the election process does not run smoothly and there is
\nunrest or riots here and there, the effect will be very damaging
\nto Indonesia's investment climate.\"<\/p>\n
In this worst-case scenario, potential foreign investors would
\nlose interest in Indonesia, while those who had already obtained
\ninvestment approvals this year might not be able to meet their
\none-year deadlines to start projects, he said.<\/p>\n
The economic crisis and political upheavals over the past year
\nand a half have driven investors from Indonesia.<\/p>\n
Last year, foreign direct investment fell 60 percent in value
\nto $13.6 billion, from $33.83 billion in 1997.<\/p>\n
However, despite their sharp drop in value, in terms of the
\nnumber of projects, foreign investments rose by 23.7 percent to
\n1035 projects last year, from 790 projects in 1997.<\/p>\n
Sugihono said foreign investors also feared possible changes
\nin investment policies if an inward looking political party won
\nthe elections.<\/p>\n
Investors feared a new government would dump the open
\ninvestment policy introduced by the current administration.<\/p>\n
\"But I doubt if there will be a major change in investment
\npolicy, even if there is a change in government after the
\nelections.\"<\/p>\n
Sugihono said signs of improvement in the country's economic
\nindicators would also play an important role in attracting
\nforeign investors in the coming months.<\/p>\n
The country's economic fundamentals, such as the inflation
\nrate and the rupiah, have indicated marked improvement in the
\npast several months. Such indicators would certainly provide more
\nincentives for foreign investors, Sugihono said.<\/p>\n
He said sectors which would still have good prospects next
\nyear included agribusinesses such as fisheries, food crops and
\nanimal husbandry, as well as oil palm, cocoa, coffee and pepper
\nplantations.<\/p>\n
Export-oriented industries using natural resources such as the
\nmining and furniture industries, as well as management, marketing
\nand technical consultancies would also remain buoyant this year,
\nhe said. (gis)<\/p>",
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