IFC to boost its investment in RI<\/p>\n
Rendi A. Witular, The Jakarta Post, Jakarta<\/p>\n
The International Finance Corporation (IFC) plans to boost its
\ninvestment in Indonesia despite the legal harassment it suffered
\nhere over the past two years, according to its local
\nrepresentative.<\/p>\n
Newly-appointed IFC country manager for Indonesia German A.
\nVegarra said on Thursday that for fiscal year 2003, which started
\nin June this year, the investment arm of the World Bank might
\ninvest four to five times more than what it invested during the
\nprevious fiscal year.<\/p>\n
He said that IFC would focus its investments in the financial
\nsector, agribusiness, infrastructure, small and medium-sized
\nenterprises (SMEs), and extractive industries like mining, and
\noil and gas.<\/p>\n
\"Over the last two years, the IFC has faced serious legal
\nhurdles which drove down investment activity in fiscal year 2002
\nto just US$21 million. If there are no significant obstacles for
\nus in the next year, we plan to increase our investments,\" said
\nVegarra, adding that the investment firm was still optimistic
\nabout the economic prospects of the resource-rich country.<\/p>\n
Vegarra said that fiscal year 2002 was a disaster for IFC in
\nIndonesia since all of its resources were focussed on dealing
\nwith battles in the local courts.<\/p>\n
He described fiscal 2002 as an \"abnormal\" year for the IFC in
\nits operations in Indonesia.<\/p>\n
\"In a normal fiscal year, our investment in Indonesia can
\nreach US$400 million to 500 million,\" said Vegarra, a Peruvian
\nnational.<\/p>\n
One example of the legal harassment encountered by the IFC
\nhere was the Manulife Indonesia case in which the local unit of
\nthe giant Canadian insurance firm was controversially declared
\nbankrupt by the Central Jakarta Commercial Court. But after
\nstrong protests from various sides, including the Canadian
\ngovernment, the Supreme Court annulled the bankruptcy ruling in
\nJune.<\/p>\n
The IFC owns about 9 percent of Manulife Indonesia.<\/p>\n
The IFC's grand strategy for empowering the country's SMEs is
\nto set up a $25 million SME facility in the eastern part of
\nIndonesia. The facility will provide technical assistance to the
\nSMEs, including how to seek bank loans and to become export-
\noriented firms.<\/p>\n
The IFC will also invest in the country's ailing textile
\nindustry to help the strategic sector regain its competitiveness
\non the international market.<\/p>\n
\"We see that Indonesia has a huge raw materials supply, strong
\nsupporting industry, and low labor wages. With capital support,
\nwe expect that the ailing textile industry will be heaved in the
\nnear future,\" said Vegarra who refused to disclose the planned
\ninvestment figure.<\/p>\n
Since 1956, the IFC has invested US$2.2 billion in Indonesia,
\nwhich makes the country its sixth largest exposure. The IFC
\nportfolio in Indonesia includes 35 companies.<\/p>\n
On Oct. 21, the corporation will host the second private
\nsector forum, which is aimed at enhancing dialog between the
\ncountry's private sector and the government so as to improve the
\ninvestment climate.<\/p>\n
The forum is part of the pre-Consultative Group on Indonesia
\n(CGI) events. The CGI groups the country's traditional lenders
\nand will meet later this month in Yogyakarta to decide on a new
\nloan for Indonesia.<\/p>",
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