Fuel problems may not hamper investment, BKPM chief says<\/p>\n
Rendi A. Witular, The Jakarta Post, Jakarta<\/p>\n
The Investment Coordinating Board (BKPM) remains upbeat that
\ndomestic and foreign investment will reach Rp 179 trillion
\n(US$18.2 billion) as projected in the state budget.<\/p>\n
The board also dismissed concerns that the ongoing investment
\nactivities in the country would fade away following a disruption
\nin the stable economic condition as an impact of the increasing
\nglobal oil prices and ballooning fuel subsidy expenses that
\ngovernment will need to pay.<\/p>\n
\"I don't want to speculate on a possible drop in investment
\nfor this year's second semester. The fuel problem is unlikely to
\naffect investor appetite although in other countries there are
\nseveral investment corrections,\" BKPM chairman Muhammad Luthfi
\nsaid on Thursday.<\/p>\n
He made the remarks after a meeting with Vice President Jusuf
\nKalla on Indonesia's investment progress and the impact of
\nsoaring global oil prices on investment here.<\/p>\n
The government has targeted approvals of foreign direct
\ninvestment this year to reach Rp 133.41 trillion -- similar to
\n2003 -- while domestic investment is expected to reach Rp 46
\ntrillion.<\/p>\n
The influential National Economic Recovery Committee (KPEN)
\nhad warned the government that there was a concern among foreign
\ninvestors about fiscal stability as the government continued to
\nmaintain its massive fuel subsidy.<\/p>\n
KPEN chairman Sofjan Wanandi said earlier that foreign
\ninvestors were now reassessing their stance toward Indonesia
\nsince there was an uncertainty in the country's fiscal condition
\nthat might affect currency exchange, inflation and interest
\nrates.<\/p>\n
The budget assumes a fuel subsidy of a total of Rp 76.5
\ntrillion for the fiscal year, which it would be if the annual
\naverage price of crude oil stayed at $45 per barrel, an exchange
\nrate of Rp 9,300 against the U.S. dollar and fuel consumption of
\n59.6 million kiloliters.<\/p>\n
But with oil prices now hovering at $62 per barrel, the rupiah
\naround Rp 9,800 (its closing rate on Thursday) and fuel
\nconsumption estimated to soar by 10 percent over and above the
\ninitial assumptions, the government may have to spend Rp 135
\ntrillion, or more, to finance the fuel subsidy.<\/p>\n
Luthfi, however, said he believed that the fuel problem was
\nlikely to be resolved soon as the government would not allow it
\nto do further damage to the country's otherwise stable macro-
\neconomic condition, as well as putting at risk its fiscal
\nstability.<\/p>\n
\"Thus far, the investment prospects in the country are still
\ngood, because there has been no sign from investors that would
\nlead to a declining investment climate. We can actually see this
\npositive trend in our first semester (2005) investment
\napprovals,\" he said.<\/p>\n
On average, fresh investment approvals -- both from domestic
\nand overseas sources -- rose by 51 percent to Rp 80.85 trillion
\nin the first semester compared to the same period last year,
\naccording to BKPM figures.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/fuel-problems-may-not-hamper-investment-bkpm-chief-says-1447893297",
"image": ""
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"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
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