Foreign direct investment drops 15 percent

Foreign direct investment drops 15 percent

Dow Jones, Jakarta

Foreign direct investment (FDI) approvals in Indonesia dropped
nearly 15 percent to US$7.16 billion in the first 11 months of
2002 from $8.42 billion in the year-ago period, the Investment
Coordinating Board (BKPM) said.

It didn't give any reason for the drop. But, analysts blamed
it on the lingering social unrest, labor disputes, a weak legal
system, and the Oct. 12 Bali bombing, which killed around 190
mostly western holiday makers.

BKPM said that $1.75 billion of the total FDI amount approved
in the 11 months of the year is for expansion of existing plants
in Indonesia.

It remains unclear if those foreign investors who have already
obtained approvals will actually go ahead with their plans.

The board said the drop in the value of domestic investments
was even steeper, falling 62 percent to Rp 21.47 trillion ($2.41
billion) during the same period from Rp 55.93 trillion a year
ago.

The world's fourth most populous country badly needs new
investment to achieve above 4 percent annual economic growth in
order to reduce huge unemployment in the country.

So far, growth has been mainly driven by domestic consumption
as both investment and export performances have been waning due
to uncertainties both at home and overseas.