Direct investment in RI up 88.02 percent in 2005

Rita A. Widiadana, The Jakarta Post, Nusa Dua, Bali

Despite security issues and slower economic growth, foreign direct investment in the country sharply increased in 2005, a top state official said on Thursday.

Speaking on the sidelines of the International Investment Forum here, the chairman of the Investment Coordinating Board, Muhammad Lutfi, said investment in Indonesia remained positive.

"The growth of foreign direct investment in Indonesia remains steady," he said.

Lutfi announced that combined domestic and foreign investment from January to Dec. 14 stood at Rp 110.86 trillion (US$11.31 billion) for a total of 1,030 projects, an 88.02 percent increase from the same period last year.

Realized domestic investment stood at Rp 28.4 trillion, while realized foreign investment was Rp 82.46 trillion for the period.

Domestic and foreign investment increased 86.11 percent and 88.69 percent respectively from the same period last year.

The International Investment Forum was held to give policy makers and the investment community the opportunity to get together and talk.

"It is also aimed at enhancing the investment climate in Indonesia," Lutfi said.

He said the government had set an average investment growth target of 6.6 percent for the 2004-2009 period, with a total investment of $426 billion. By reaching this target, Indonesia hopes to cut unemployment to 5.5 percent by 2009 and reduce the number of people living below the poverty line to 17 million by the same year.

Lutfi said the government had prepared a new draft law on investment to attract more direct investment.

The draft will combine the existing laws on foreign investment and domestic investment. If the draft becomes law, it would open almost every sector to investment.

"Investment incentives will be given including investment tax allowances, import duty reductions for machinery and equipment, and other beneficial incentives," Lutfi said.

Planned domestic and foreign investment in the January to December period totaled Rp 164.24 trillion for 1,749 projects. According to Lutfi, that was a 15 percent increase from the Rp 142.81 trillion in the same period last year.

The food industry led domestic investment realization with Rp 8.05 trillion, followed by the paper and printing industry (Rp 5.96 trillion), electricity, gas and water (Rp 5.76 trillion), food crops and plantations (Rp 4.27 trillion) and hotels and restaurants (Rp 4.05 trillion).

The transportation, warehouse and communications industries led the way in terms of foreign investment realization in the January to December period with $2.93 billion. This was followed by the chemical and pharmaceutical industry ($1.14 billion), construction ($896 million), the food industry ($549.5 million) and the mining industry ($470.2 million).