Foreign investment declines by 15 %

JAKARTA (JP): Government-approved foreign investment declined by 15 percent within the first two-and-a-half months of this year over the same period of 1995, while domestic investment rose by 86.5 percent.

Data from the Investment Coordinating Board showed that foreign investment approved between Jan. 1 to March 15 this year reached US$8.5 billion, far lower than the $10 billion approved in the same period in 1995.

The data also indicated that domestic investment in the first months of this year increased to Rp 25 trillion ($10.8 billion) from Rp 13.4 trillion in the same period of 1995.

In terms of projects, however, the number of foreign investment projects increased by 72.6 percent to 271, from 157 in the same period in 1995.

The number of domestic investment projects decreased by 1.4 percent from 213 to 210.

The decline in foreign investment coupled with the increase in projects seems to indicate that foreign investors are becoming more interested in smaller ventures. Domestic investors, on the other hand, seem to be committing to bigger projects.

Approved investment projects normally need about two years for realization. The coordinating board has ruled that an investment license will be revoked if construction has not begun three years after a project is approved, unless the investor applies for an extension.

The data showed that foreign investment is mainly committed to the paper industry (with a total investment of $2.8 billion), the chemical industry ($1.6 billion) and housing and industrial estates ($1.1 billion).

Most domestic investment was in the chemical industry (Rp 4.7 trillion), housing and industrial estates (Rp 4.3 trillion) and the paper industry (Rp 3.4 trillion). (kod)