Investors cut operations because of uncertainty<\/p>\n
JAKARTA (JP): Foreign and local investors have significantly
\ncut the operations of their industrial factories due to
\nuncertainty in the country's political situation, State Minister
\nof Investment Hamzah Haz said yesterday.<\/p>\n
\"They see the condition still fluctuating and they reduce
\nproduction activities,\" Hamzah told reporters on the sidelines of
\na hearing with House of Representatives Commission V for
\nindustry, mining, trade, manpower, the environment and
\ncooperatives.<\/p>\n
This was evident in the 70 percent decrease in the imports of
\nboth foreign and local investors since last year, said Hamzah,
\nwho is also the chairman of the Investment Coordinating Board.<\/p>\n
According to the board, imports of capital goods of both
\nforeign investment and local investment in April were down to
\nUS$5.80 million from $113.09 million in the same month last year.<\/p>\n
In the same month, imports of raw materials also dropped to
\n$150,000, down from $23.88 million in April 1997.<\/p>\n
\"What will happen is a scarcity in manufactured products, as
\nimport activities keep declining,\" Hamzah said.<\/p>\n
He said local and foreign investors had asked him when the
\nsituation would return to normal.<\/p>\n
\"I told them it could take from one to two years,\" Hamzah
\nsaid.<\/p>\n
The government's plan to hold both an extraordinary session of
\nthe People's Consultative Assembly and a general election require
\nlong and comprehensive preparations, he said<\/p>\n
\"My assumption is that legal preparations for the elections
\nwill be finished by March of next year, and will be followed by
\noperational preparations, so that the elections could be
\nconducted at the end of next year at the earliest,\" he said.<\/p>\n
But the government must ensure social and economic stability
\nin order to have safe elections, otherwise more social unrest
\nwould occur, he said.<\/p>\n
There must be adequate supplies of essential goods at
\naffordable prices, and there must be less layoffs, he said.<\/p>\n
However, Hamzah dismissed speculation that investors had lost
\ninterest in Indonesia.<\/p>\n
\"New applications keep coming, nobody has canceled their
\ninvestment plans. Our investment activities are not stagnant,\" he
\nsaid.<\/p>\n
Hamzah said investment realization had also declined this
\nyear.<\/p>\n
Between July 1997 and May this year, local investors realized
\n353 projects with investment worth Rp 19 trillion. In the same
\nperiod, foreign investors realized 320 projects with investment
\nworth $2.97 billion.<\/p>\n
He predicted that the realization of investment approvals
\nwould continue to decline in the 1998\/1999 period.<\/p>\n
But the economic and political crisis had set back the
\ncountry's investment development to equal that of the beginning
\nof 1970s, when the country was working hard to invite foreign
\ninvestors, he said.<\/p>\n
The government is currently working on establishing a new
\npolicy on investment, which includes criteria on eligible
\nrecipients of tax incentives. The new policy is being finalized
\nand is expected to be completed early next month, he said.<\/p>\n
The new policy will focus on investment activities in the
\neastern part of the country, he said.<\/p>\n
It will be set to boost the export sector and to create more
\njob opportunities, as well as support pioneering business fields
\nand agribusiness, capital goods and machinery industries, he
\nsaid.<\/p>\n
The new policy will also limit the time span of projects'
\nrealization to one year, he said.<\/p>\n
Currently, companies which cannot complete their investment
\nprojects within three years can apply for an extension of up to
\ntwo years, due to the monetary crisis, he said. (das)<\/p>",
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