FDI approvals fall by 88 percent<\/p>\n
Adianto P. Simamora, The Jakarta Post, Jakarta<\/p>\n
Foreign direct investment (FDI) approval dropped by 88 percent to
\nUS$291.5 million in the first quarter of this year compared to
\n$2.44 billion in the same period in 2001, according to data
\nprovided by the Investment Coordinating Board (BKPM).<\/p>\n
The BKPM data shows that the number foreign investment scheme
\nprojects fell to 189 projects from 281 projects.<\/p>\n
BKPM did not explain the reasons behind the FDI fall.<\/p>\n
The country has seen FDI falling since 1998 as investors
\nturned away due to various problems such as legal uncertainty,
\nlabor strife, security problems and political and economic
\ninstability.<\/p>\n
Last year, FDI approvals dropped by 41.5 percent to $9.02
\nbillion.<\/p>\n
Although the rupiah and the stock market have been on the rise
\nduring the first quarter, making the local financial market the
\nbest performing market in the region so far, due to rising
\ninvestor sentiment in the country, analysts said that FDI had yet
\nto return in significant amounts due to lingering problems like
\nlegal uncertainty.<\/p>\n
BKPM chairman Theo F. Toemion recently proposed a tax holiday
\nfacility to attract foreign investors, a plan criticized by
\nofficials from the finance ministry, which has been under
\npressure to collect as much tax revenue to help finance the state
\nbudget. President Megawati Soekarnoputri, however, reportedly
\nsupports the tax holiday plan.<\/p>\n
The BKPM data also reveals that the value of project
\nexpansions by existing foreign investors declined in the first
\nquarter of the year to $482.2 million from $523.5 million.<\/p>\n
BKPM said that the popular sectors among foreign investors
\nduring the period were the trading sector with 82 projects, the
\nservice sector with 26 projects, transportation with 13 projects
\nwhile basic metal, engineering and electronics industries
\namounted to 12 projects.<\/p>\n
Meanwhile, domestic investment approvals during the period of
\nJanuary to March 2002 fell to Rp 847.5 million from last year's
\nRp 6.72 billion with the number of new projects reaching 27
\nprojects.<\/p>",
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