Capital continues to flow out of RI

The Jakarta Post, Jakarta

The flow of foreign direct investment (FDI) to Indonesia continued to be negative in 2001, with a divestment of US$3.27 billion, though less than the $4.55 billion that flew out of the country in 2000, the United Nations Conference On Trade and Development said in its latest investment report.

The World Investment Report 2002 of the Geneva-based UNCTAD, issued on Tuesday, shows Indonesia to be the only country in East Asia to have suffered capital flight since 1998.

All other countries, including Thailand, Malaysia, the Philippines and South Korea, which were also hit by the 1997 East Asian economic crisis, continued to enjoy positive FDI flows.

However, the FDI data does not capture the total capital flight out of Indonesia, as the UNCTAD report covers only long- term direct investment, and does not include short-term, portfolio capital flows.

If short-term funds were also accounted for, Indonesia has suffered an even greater private capital outflow, amounting to $8.2 billion in 2001, almost $10 billion each in 2000 and 1999, and $13.8 billion in 1998, according to the Ministry of Finance in Jakarta.

Even though most Southeast Asian countries recorded increased capital inflows, FDI inflow to the region stagnated at $13 billion in 2001, due in part to the continued divestment in Indonesia.

"FDI flows to Thailand totaled $3.8 billion, Malaysia $554 million, Singapore $9 billion, the Philippines $1.8 billion. Even Vietnam recorded $1.3 billion in capital inflows," the report says.

China remained the single largest recipient of FDI in East Asia with $47 billion, up 15 percent from 2000.

The report, a copy of which was made available to The Jakarta Post, carries in-depth analyses of the role of transnational corporations (TNCs) in the economic globalization process, global trade and in strengthening export competitiveness of developing countries.

FDI inflows worldwide totaled $735.14 billion, down sharply from $1.49 trillion in 2000. Developed economies remained the largest recipient of FDI inflows with $503.14 billion, with developing economies taking up the other $204.8 billion.

The European Union was the largest destination of FDI inflows to developed economies, taking in $336.21 billion, followed by North America with $151.9 billion, and other developed economies getting the remaining $28.3 billion.

Asia and the Pacific took up half of the FDI inflows to developing economies, Latin America and the Caribbean $85.3 billion, and Africa $17.2 billion.