First quarter plummet in foreign direct investment

First quarter plummet in foreign direct investment

JAKARTA (JP): Foreign direct investment approved by the
government in the first quarter of this year plunged almost 90
percent to US$560 million from $5.1 billion during the same
period last year.

Approved domestic investment in the same period more than
tripled to Rp 53.7 trillion ($6.1 billion) from Rp 16.9 trillion,
according to State Minister of Investment Hamzah Haz.

Hamzah said licensed foreign investment projects fell to 187
from 304, while domestic investment projects fell to 36 from 91
projects.

"However, we should be aware that not all of the approved
investment projects will be implemented," he said at the
inauguration of the operation of dry silica sand producer PT
Sibelco Lautan Minerals.

Hamzah said the government's latest figures indicated
realization of investment projects stood at only 35 percent.

He attributed the low investment realization to limited
financial support, shortage of raw material supplies, unskilled
labor, low technology and ineffective marketing.

"Although investment realization is relatively low, domestic
and foreign companies have contributed significantly to national
non-oil and gas exports."

Hamzah said domestic and foreign companies licensed through
his office contributed $20 billion or 75 percent of the country's
non-oil and gas exports from January to July 1998.

He said the government had improved the investment climate for
domestic as well as foreign investors by issuing several new
deregulation measures.

"One of them is the delegation of authority to governors for
issuing domestic investment approval (for amounts up to) Rp 10
billion."

He added that as chairman of the Investment Coordinating Board
he could now approve investment projects worth up to $100
million.

The government would continue to issue deregulation measures
to help restore investor confidence, he said. (02)