FDI rises, Mauritius tops the list

FDI rises, Mauritius tops the list

Evi Mariani, The Jakarta Post, Jakarta

Foreign direct investment (FDI) approvals rose sharply in
terms of value during the first semester of the year from the
same period last year, with tiny African island-state Mauritius
topping the list of countries of origin.

The Investment Coordinating Board (BKPM) reported a 43.9
percent increase from US$3.03 billion during the first semester
last year to $4.37 billion this year.

The foreign investors who received approval in the first
semester promised to absorb 113,606 domestic employees and 3,279
foreign workers.

However, BKPM recorded a 34 percent decline in the value of
new projects and a 27 percent decline in the expansion projects'
value. The sharp rise in total value resulted from companies
changing their status from domestic to foreign investment.

The "change of status" value jumped 17 times to $2.4 billion
from $139 million in the same period last year.

Of this increase, Mauritius accounted for 73 percent ($1.75
billion) of the total value of the change of status investment,
comprising seven projects.

Mauritius, which outranked the country's largest FDI source,
Japan, last semester, accounted for $826 million in FDI approvals
last year, mostly in the form of change of status investments.

In terms of numbers of projects, the sectors most attractive
to foreign investors in the first semester of this year were
trade and repair, which both accounted for 38 percent of the 497
projects approved over this period. "Other services" accounted
for 14 percent, while metal, machinery and the electronics
industry made up 10 percent.

In terms of value, the transportation, storage and
communications sectors were the largest recipients of FDI in the
first semester, with $1.96 billion. They were followed by the
non-metallic mineral industry with $506.8 million.

Investment approvals have been declining since the country was
hit by the economic and political crisis in the middle of 1997.

In 2002, FDI approvals plummeted 35 percent, while domestic
investment approvals dropped 57 percent.

The government has declared 2003 as Invest in Indonesia Year
in a bid to attract more investors.

Responding to the mounting pressure from foreign investors to
improve the investment environment, the government has pledged to
allocate more portion of next years' budget to fix
infrastructure.

As for domestic investment value, BKPM reported a 36 percent
decline in value to Rp 8.17 trillion (US$996 million) from Rp
12.77 trillion in the six months to June.

Domestic investors whose projects were approved during the
first semester planned to absorb 23,898 domestic workers and 233
foreign workers

In terms of the number of projects, the most popular sector
for domestic investors in the period were the chemical and
pharmaceutical industries, accounting for 15 percent of the 95
projects approved. The food industry accounted for 14 percent.

In terms of value, the leading sector for domestic investors
was the food industry, which booked Rp 1.85 trillion, followed by
the transportation, storage and communications sector with Rp 1.6
trillion.

Aside from issuing approvals, in the first six months of the
year BKPM also issued permanent licenses to foreign investors who
want to realize a total of 218 projects valued at $1.06 billion.
The projects will absorb 44,128 employees.

The agency also issued permanent licenses to domestic
investors who want to realize a total of 44 projects valued at Rp
2.62 trillion in the first half of the year. The projects will
absorb 13,514 employees.