FDI approvals down by 30.6% in January-April
FDI approvals down by 30.6% in January-April
Dadan Wijaksana, Jakarta
The country's struggle to recover from its investment slump
took another hit on Tuesday, as the National Investment
Coordinating Board (BKPM) reported another sharp drop in foreign
direct investment (FDI) approvals in the first four months of the
year.
The state agency said that US$2.3 billion worth of FDI was
recorded during the January-April period, marking a 30.6 percent
decline from the same period last year.
No official reasons were given by the agency for the decline
in the figures, which should further expose the country's
continued weak business climate, with investors complaining about
various problems here considered detrimental to the government's
efforts to lure investors.
Legal uncertainty, security fears, labor-related disputes and
uncontrolled decentralization are at the top of a long list of
issues that have hindered the return of fresh investment.
Nevertheless, efforts to turn things around have brought about
little change, investment approvals consequently have been
declining.
Before the 1997 Asian economic crisis, investment was one of
the country's main economic engines. But now, it accounts for
less than 10 percent of country's gross domestic product (GDP) --
with domestic consumption contributing more than 75 percent.
Various surveys and reports have predicted that the sluggish
investment climate would likely continue at least until after the
country had a newly assembled government later this year after
the presidential election is final.
Elsewhere, the report said, the metal, machinery and
electronics sectors had attracted the highest foreign investment,
followed by hotels and restaurants, the textile industry and the
construction sector during the period.
BKPM's report also showed that they had issued licenses for
120 FDI projects valued at $919.1 million as compared with 155
projects worth $749.5 million a year earlier.
Of the total, Japanese firms were the largest group of
investors with 20 projects worth $851 million, followed by U.K.
firms with 18 projects worth $672.1 million and South Korean
companies with 61 projects at $148 million.
In total, the projects had the potential to absorb around
65,000 workers, both Indonesians and expatriates.
On domestic investment however, BKPM reported a 115 percent
rise during the same period with approvals standing at Rp 12
trillion (about $1.4 billion).
The data on domestic investment should be encouraging as it
may reflect a speedier restructuring pace in both the corporate
and banking sectors.