FDI approvals fall 42% in first semester: BKPM<\/p>\n
Dadan Wijaksana and A'an Suryana, The Jakarta Post, Jakarta<\/p>\n
Foreign direct investment (FDI) approvals dropped by 42
\npercent to US$2.5 billion in the first half of this year from
\n$4.3 billion in the same period last year, the Investment
\nCoordinating Board (BKPM) said in a press release on Tuesday.<\/p>\n
The board, however, did not offer any explanations for the
\ndecline or provide other details.<\/p>\n
Separately, a senior government official attributed the drop
\nin FDI approvals to a combination of uncertainty in the global
\neconomy and the country's declining investment competitiveness.<\/p>\n
\"The global downturn had prompted investors to be more careful
\nand selective in investing their money,\" Firman Tamboen of the
\nOffice of the Coordinating Minister for the Economy said on
\nTuesday.<\/p>\n
A string of financial scandals in the U.S. has painted an even
\nbleaker outlook for the global economy, threatening to jeopardize
\nthe fragile recovery process.<\/p>\n
Firman also said that as an investment destination, Indonesia
\nwas considered less competitive than other countries.<\/p>\n
While he did not provide any data, Firman said many analysts
\nand businesspeople had said that labor disputes, the volatile
\npolitical situation and confusion over regional autonomy
\ndiscouraged investors from bringing their money into the country.<\/p>\n
But most of all, the country's corrupt and unpredictable
\njudicial system has lessened investors' appetite for investment
\nhere, he said.<\/p>\n
BKPM chairman Theo F. Toemion previously acknowledged that
\nlegal uncertainty played a significant role in pushing investors
\naway, saying that efforts to attract more investment would fail
\nif the country remained half-hearted about legal reform.<\/p>\n
Since the economic crisis struck in the late 1990s, investment
\napprovals for both foreign and domestic investors have declined,
\nas the risks for investing in the country have risen.<\/p>\n
Last year, FDI approvals dropped by 41.5 percent to $9.02
\nbillion from the previous year. For 2001, domestic investment
\namounted to Rp 58 trillion.<\/p>\n
The BKPM also said in its press release that domestic
\ninvestment approvals dropped by more than 70 percent to Rp 11.1
\ntrillion in the first half of this year, from Rp 39.8 trillion in
\nthe same period last year.<\/p>\n
Indonesia badly needs foreign investment to help push its
\nhigher economic growth, which would create more new jobs for the
\nmillions of unemployed in the country.<\/p>\n
The government projected the economy to grow by 4 percent this
\nyear, but experts have said that this would not be enough to
\nabsorb the millions of people made jobless by the late 1990s
\neconomic crisis.<\/p>\n
Unlike short-term investments, such as those in the capital
\nmarket, direct investments are seen as having a greater impact on
\neconomic activity and sparking quicker economic growth.<\/p>\n
Over the last two years, domestic consumption has been the
\nprimary mover of the country's economic growth.<\/p>\n
Firman promised that the government would take steps to regain
\nthe confidence of foreign investors.<\/p>\n
\"We are determined to create a favorable climate for
\ninvestment, including the immediate completion of a new
\ninvestment law being drafted by the BKPM,\" said Firman.<\/p>",
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