Foreign investment dropped by 84% in May

JAKARTA (JP): Foreign direct investment dropped by 84 percent to US$167.6 million in May from $1.084 billion in April, a senior government official said on Tuesday.

Deputy to State Minister of Investment and State Enterprises Development Andung Nitimihardja blamed the plunge in foreign investment approval on the country's deteriorating political situation.

"It's a drastic fall, and it's mainly due to politics," Andung said following a meeting with the House of Representatives' Commission IX. He did not elaborate on his statement.

He said approval of domestic direct investment in May dropped by 75 percent, reaching only Rp 756.8 billion ($88 million) from Rp 3.038 trillion in April.

Analysts have also said that the country's volatile political state is the main reason for the worsening economic indicators.

They have pointed to the Cabinet reshuffle in late April that saw the dismissal of two economic ministers from leading political parties by President Abdurrahman Wahid.

The replacement of former state minister of investment and enterprises development Laksamana Sukardi from the Indonesian Democratic Party for Struggle and former minister of industry and trade Yusuf Kalla from the Golkar party sparked political discord between the parties and the President.

Current state minister of investment and enterprises Development Rozy Munir attributed the drop in investment due to a lack of security and legal certainty.

Nevertheless, Andung reported that in the January to May period, foreign direct investment approvals increased to $2.06 billion from $1.62 billion during the same period last year.

Domestic investment approvals for the January to May period, he added, rose to Rp 11.67 trillion from Rp 11.14 trillion during the same period in 1999. (bkm)