FDI drops 11%, domestic dives 70%<\/p>\n
Adianto P. Simamora, The Jakarta Post, Jakarta<\/p>\n
Foreign direct investment (FDI) approvals dropped by 11
\npercent to US$5.4 billion from January to September this year
\nfrom $6.08 billion in the same period last year, according to the
\nInvestment Coordinating Board (BKPM), and could go lower after
\nthe Oct. 12 Bali tragedy.<\/p>\n
Theo F. Toemion, BKPM chairman said that the drop in the FDI
\napprovals was due mainly to lingering social unrest, the labor
\ndisputes and a lack of confidence in the legal system here.<\/p>\n
\"The fall in investment approvals is very tragic, I believe
\nthe above factors have led to the drop in investor confidence in
\nIndonesia,\" Theo told the House of Representatives Commission V
\noverseeing industry and trade affairs.<\/p>\n
Worse still, domestic investment approvals dropped even
\nsteeper by about 70 percent to Rp 15.99 trillion (US$1.75
\nbillion) in the first nine months of this year, from Rp 50.74
\ntrillion in the same period last year.<\/p>\n
Indonesia badly needs foreign investment to achieve economic
\ngrowth and to create new jobs. The total investment however, has
\nbeen steadily on the decrease since the economic crisis hit the
\ncountry in the middle of 1997.<\/p>\n
Data from the board showed that in 2001, the FDI approvals
\ndropped 41.5 percent to $9 billion, from the previous year's
\n$15.42 billion. Domestic investment amounted to Rp 58 trillion in
\n2001.<\/p>\n
Both foreign and domestic investors have long been complaining
\nabout the discouraging investment climate characterized by
\nsecurity issues, labor strife, corruption and the absence of a
\ncredible legal system.<\/p>\n
\"If we fail to solve these problems as fast as possible, the
\ninvestment will remain very bad in the future,\" Theo said.<\/p>\n
Theo added that the Oct. 12 deadly bomb blasts in Bali which
\nkilled more than 190 people and had not been figured into the
\nlatest data, would further discourage investors from coming to
\nthe country.<\/p>\n
\"It will take a long time for investor confidence to recover
\nafter the Bali tragedy,\" Theo said.<\/p>\n
Sri Adiningsih, economist at Gadjah Mada University agreed,
\nsaying the Bali tragedy would further deal a blow to the
\ninvestment climate in the country.<\/p>\n
\"Foreign investors are now very wary. They are waiting for the
\ngovernment's seriousness in solving the (Bali) tragedy,\" Sri told
\nThe Jakarta Post.<\/p>\n
Anton Gunawan economist at Citibank, however, expressed
\noptimism that the investment would start to recover next year.<\/p>\n
\"The Bali tragedy will not cause a drastic fall in investment
\nhere. I see several mega projects starting next year in the
\ncountry,\" Anton told The Post, adding that the new projects were
\nin the energy sector, the automotive sector, household products
\nand the pharmaceuticals sector.<\/p>\n
Elsewhere, Theo said that the agency was now focusing on
\nhelping the existing investors overcome their problems so that
\nthey would not leave the country.<\/p>\n
\"During our meeting in Bali last month, many investors
\ncomplained about many things, including taxation, customs,
\nbureaucratic red tape and labor disputes,\" Theo said.<\/p>",
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"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
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