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)