Direct investment still flowing to RI: Hamzah

Direct investment still flowing to RI: Hamzah

SINGAPORE (Reuters): Indonesia's State Minister of Investment, Hamzah Haz, said here yesterday that trade and investment into the country had not been completely halted by the economic crisis, despite some credit financing problems.

The minister, in Singapore to attend the fourth meeting of ASEAN (Association of Southeast Asian Nations) heads of investment agencies, told reporters business had slowed down, but was not stagnant.

"There has not been an interruption of foreign direct investment. It is not stagnant," he said, speaking through an interpreter.

"For the time being, because of the low purchasing power of the market and level of difficulty in (obtaining) letters of credit, there has been a little bit of a slowdown," he said.

Existing investors were continuing to do business in Indonesia, the minister said.

He declined to comment directly about the delay in Singapore's trade finance guarantee scheme for Indonesia and its effects on trade flow, saying there were other problems affecting trade.

"The fluctuation of the exchange rate is also one main reason" that was making investors cautious, he said.

Singapore has said it plans a US$5 billion trade financing scheme, US$3 billion of which would guarantee export credit while another US$2 billion would be used for exports through Singapore to Indonesia.

The minister said foreign investors were still interested in participating in Indonesia, particularly its oil and gas sector.

"There have been strong indications that an investor from Kuwait is seriously going to (enter) the upstream and downstream industries. This is the situation at the moment," he said.

Hamzah said he could give no time frame for the investment because privatization of the sector would require changes to Indonesian law which are still being considered.

Any investment in the meantime would have to be made via the state owned oil monopoly, Pertamina.

A joint press statement released at the end of the meeting, said foreign direct investment flows and intra-ASEAN investment flows have declined "dramatically since the beginning of the crisis."

"In this regard, they agreed that there is a need to take collective actions and measures in addition to those taken in the individual member countries," the statement said.