FDI approvals rise as hundreds of companies plan for expansion
FDI approvals rise as hundreds of companies plan for expansion
Adianto P. Simamora, The Jakarta Post, Jakarta
Hundreds of the existing foreign investors plan to expand
their businesses in the country despite lingering legal
uncertainty and possible rising security problems ahead of the
2004 national elections.
The Investment Coordinating Board (BKPM), in its latest
report, said that expansion plan approvals were 121 projects in
the first-five months in 2003, compared to 117 projects in the
same period of last year.
"The data shows that the existing foreign companies still have
opportunities to develop and expand their business activities in
Indonesia," the board said.
The data on foreign direct investment (FDI) approvals rose by
84.8 percent in the first five months in 2003 to US$4.02 billion
from the same period last year, including approvals for expansion
plans valued at $530 million.
The most popular sectors for foreign investors were trading
and repair; metal, machinery and electronic manufacturing and
hotels and restaurants.
Meanwhile, despite the fact that the total domestic investment
approvals dropped sharply by 54 percent to Rp 5.9 trillion during
the first-five months, the number of expansion projects has been
on the rise.
The board said that, as of May, there were 35 expansion
project plans from domestic players with the total investment of
about Rp 1.6 trillion.
The popular sectors for domestic players include the food
industry, chemical and pharmaceutical production as well as
transport, storage and communication.
The food industry has been the most popular of all for
domestic investors with investment approvals in the period
amounting to Rp 1.7 trillion. That is followed by the chemical
and pharmaceutical industry, which recorded Rp 940 billion in
investment approvals.
Investment approvals had been declining since the country
plunged into a combined economic and political crisis in 1998.
In 2002, for example, FDI approvals plummeted by 35 percent to
$9.7 billion, while domestic investment approvals dropped by 57
percent to Rp 25.26 trillion.
Experts said legal uncertainty, security problems and poor
implementation of regional autonomy were among factors that have
discouraged both foreign and domestic investors from investing
here.
Boosting investment is vital for the recovery of the country's
ailing economy to help create new jobs for millions of unemployed
people and to meet this year's 4 percent economic growth target.
After declaring the year 2003 as Indonesia Investment Year,
the government has tried hard to attract more investors to the
country, offering various incentives.