FDI falls 34 percent in first semester<\/p>\n
The Jakarta Post, Jakarta<\/p>\n
Indonesia continues to struggle to recover from an investment
\nslump, with the National Investment Coordinating Board (BKPM)
\nreporting on Wednesday a 34 percent year-on-year drop in approved
\nforeign direct investment (FDI) in the first half of the year.<\/p>\n
BKPM deputy chairman Yus'an said approved FDI declined to
\nUS$3.05 billion during the period.<\/p>\n
Yus'an said the fall in FDI was largely due to a decline in
\nnew project approvals, but had been partly offset by a sharp
\nincrease in approvals for project expansions.<\/p>\n
He also cited political jitters during the current election
\nyear as a factor in deterring new investment.<\/p>\n
Despite this, however, domestic investment approvals rose 52
\npercent to Rp 15.77 trillion (US$ 1.77 billion) from the same
\nperiod last year, the BKPM said.<\/p>\n
The country has suffered from a lack of investment activities
\nover the past several years as a result of various factors,
\nincluding legal uncertainty, security fears, labor disputes and
\nthe poor implementation of regional autonomy.<\/p>\n
This lack of investment has caused the country's economy to
\ngrow at the unspectacular rate of about 4 percent over the past
\nseveral years.<\/p>\n
Before the 1997 Asian economic crisis, investment was one of
\nthe country's main economic engines. Now it accounts for less
\nthan 10 percent of the country's gross domestic product (GDP),
\nwith domestic consumption contributing more than 75 percent.<\/p>\n
Experts have said that overseas investment is crucial for the
\ncountry to return to annual growth of at least 6 percent, which
\nis the rate needed to begin cutting poverty and reducing massive
\nunemployment.<\/p>\n
Yus'an said the increase in project expansion approvals
\ndemonstrated that those foreign investors in the country remained
\nconfident about Indonesia's future.<\/p>\n
\"If you look at the details, there is hope that foreign
\ninvestment will grow. Investors who have been here can better
\nunderstand the situation and business prospects, so they are
\nconfident about expanding their businesses,\" he said.<\/p>\n
He added that the peaceful legislative election on April 5 and
\nthe first round of the presidential election on July 5 had
\nimproved sentiment.<\/p>\n
Yus'an said another factor that could boost new projects in
\nIndonesia was China's efforts to rein in its overheating economy.<\/p>",
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