Foreign investment fell 77% in first half

JAKARTA (JP): Foreign direct investment approved by the government in the first six months of this year plunged by 77.5 percent to US$1.88 billion, from $8.35 billion during the same period last year.

According to data from the Investment Coordinating Board (BKPM), licensed domestic investment in the same period dropped 36.07 percent to Rp 19.12 trillion, from Rp 29.9 trillion in the first semester of 1998.

Asril Noer, an assistant to the state minister of investment, said over the weekend the number of approved foreign investment projects in the period, however, rose by 7.5 percent to 518 projects, from 482 projects, despite a sharp drop in their value.

Approved domestic investment projects fell to 102 in the first six months of this year, from 169 projects in the corresponding period last year.

"However, we should be aware that not all of the approved investment projects will be implemented," Asril, who is also BKPM's secretary added.

He said the increase in the number of approved foreign investment projects indicated a shift in investors' interest from large-scale projects in previous years to medium-scale projects.

Asril said most of the projects were in export-oriented industries which used natural resources, namely agribusiness, fisheries, the food industry, plantations and mining.

Japanese investors topped the list, committing more than $135 million in investment as of the end of May. They were followed by investors from South Korea and Australia.

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 and BKPMD (provincial investment offices) for issuing domestic investment approval."

As the chairman of the Investment Planning Board, State Minister of Investment Marzuki Usman could now approve investment projects worth up to $100 million, Asril said. Investments worth more than $10 million previously required the direct approval of the President.

Marzuki said the government planned to give permanent resident status to foreigners with a total investment of at least $1 million in the country. He said the status would allow them to enter Indonesia without a visa.

BKPM's vice chairman Andung A. Nitimihardja said separately on Friday that BKPM had authorized its provincial offices (BKPMD) in eight provinces to license domestic investments as a pilot project to speed up licensing procedures.

The investment offices in West Java, Jakarta, Central Java, Yogyakarta, East Java, North Sumatra, East Kalimantan and South Sulawesi, would be allowed to approve all domestic investment projects.

"The pilot project will start later this month," he told Antara.

He said previously BKPMD were only allowed to approve domestic investment projects valued at up to Rp 10 billion.

Last year, foreign direct investment fell by 60 percent to $13.6 billion, from $33.83 billion in 1997.

However, in the same period the number of foreign investment projects rose by 23.7 percent to 1,035 projects, from 790 projects in 1997.(gis)