Expansion by foreign firms stronger in 2002: BKPM
Expansion by foreign firms stronger in 2002: BKPM
Dadan Wijaksana, The Jakarta Post, Jakarta
Despite the poor image of the country's business climate, some
existing foreign investors continued to make expansion plans last
year, according to the Investment Coordinating Board (BKPM).
While the US$9.7 billion in foreign direct investment (FDI)
approvals in 2002 recorded a 35 percent drop compared to the
investment level in 2001, one third of this, or around $3.7
billion, had been intended for expansion projects.
BKPM said this was more than twice the $1.6 billion expansion
plans approved in 2001.
"The data shows that existing (foreign) companies still have
opportunities to develop and expand their business activities
here in Indonesia," BKPM said in a statement.
The data did not specify the reasons behind the increase.
The board elaborated that the expansion plans mainly covered
four sectors: transportation, storage and communications; trade
and repair; construction; and metal, machinery and electronics.
In the construction sector, expansion-related investment plans
increased to $224 million last year from $9.6 million the
previous year.
The transportation, storage and communications sector saw
investment approvals worth $303 million, compared to $31.6
million in 2001.
Investment approvals in the trade and repair sector increased
from $118.8 million to $359.6 million, while the metal, machinery
and electronics sector also experienced a rise from $203.1
million to $260.7 million.
Although slim in terms of value, the figures were encouraging
as they offered respite amid a host of problems clouding the
country's investment climate.
This indicates that there are indeed plenty of sectors that
possess ample chances for serious development by the government
to retain the momentum of expansion plans and keep them flowing.
While figuring out how to lure new investment still appears to
be a hard nut to crack, maintaining the existing investments is
the least the government can do.
In the meantime, the government could gradually tend to its
housework in order to create a domestic environment conducive to
investment.
The long list of unfinished tasks, which have caused a rapid
deterioration of foreign confidence in operating businesses
Indonesia, includes labor conflicts, legal uncertainty,
unfavorable tax system, and regional autonomy.
Since the country plunged into a combined economic and
political crisis in 1998, the FDI in Indonesia has been in a
declining trend.
A steeper decline was seen in domestic investment approvals,
which last year saw a 57 percent drop from Rp 58.62 trillion to
Rp 25.26 trillion.