BKPM and Foreign Ministry to promote investment

JAKARTA (JP): The Ministry of Foreign Affairs and the Investment Coordinating Board (BKPM) signed an agreement on Tuesday to cooperate in promoting foreign investment in the country.

Minister of Foreign Affairs Ali Alatas said that under the agreement overseas embassies, consulates general and trade offices would be authorized to issue preliminary approvals to foreign investors wishing to open businesses in Indonesia.

"It is a breakthrough which reflects the government's serious efforts to attract foreign investors to Indonesia amid the current low confidence and unattractive condition of Indonesia," Alatas said after the signing of the agreement.

Alatas said that under the agreement, Indonesian diplomats would receive training from BKPM about investment opportunities in Indonesia.

"The overseas representatives will also be more proactive in informing foreign investors about the business opportunities in Indonesia and policies made to facilitate foreign investment," he said.

Alatas said that the new service would be provided in all Indonesia's overseas representative offices.

"We are trying to attract traditional foreign investor countries, such as Britain, the United States, Japan and Hong Kong, to invest more and also to catch new potential investors such as Middle East countries," he said.

State Minister of Investment Hamzah Haz said the embassies and consulates would also be authorized to provide technical assistance to prospective foreign investors.

"It is part of our effort to streamline paperwork to help facilitate the operations of foreign and local investors in Indonesia," Hamzah, who is also the chairman of BKPM, said.

He said the Indonesian embassies were expected to begin the new task in the third quarter of this year.

Under the new service, potential foreign investors can send their application letters and other requirements to Indonesian embassies or consulates in their home countries.

The embassies would then select the suitable proposals and forward them to BKPM for possible approval.

"Investors will not have to come to Jakarta to hand in their investment applications. They only have to come here after their proposal has been approved. The new service would help minimize potential investors' costs," he said.

Hamzah said that Indonesian diplomats would be better informed about the characteristics of investors from their working areas.

"They will provide better approaches to attract investors from their areas because they know the investors' tastes better than BKPM," he said.

The signing of the agreement was Hamzah's last responsibility as state minister for investment and chairman of BKPM. Hamzah, also chairman of the United Development Party (PPP), relinquished his position later in the afternoon to Marzuki Usman, the minister of tourism, arts and culture. He will then focus his activities on campaigning for his party, one of 48 contesting the June general election.

Hamzah said foreign direct investment fell by 60 percent to US$13.6 billion last year from $33.83 billion in 1997.

However, the number of foreign investment projects rose by 23.7 percent to 1035 projects last year from 790 projects in 1997, despite the sharp drop in their value.

He said the rise in the number of approved foreign investment projects indicated a shift in the interest of investors to medium-scale projects from large-scale ones in previous years.

Foreign direct investment approvals during the first four months of this year amounted to 279 projects worth $935 million, he said. (gis)