Foreign investment set to fall
Foreign investment set to fall
JAKARTA (JP): State Minister of Investment Sanyoto
Sastrowardoyo projected here yesterday that foreign investment
approvals are likely to drop by 30 percent to US$27 billion this
year from $39.9 billion in 1995.
"The value of foreign investment approvals will decline this
year but in term of the number of approved projects, there will
be more than last year," he told the media following a hearing
between his office and the House of Representatives' Commission
on the state budget.
He said that the projected sharp drop in the value of foreign
investment approvals this year will not be caused by a decline in
foreign confidence in the Indonesian business climate but due to
the fact that most of the approved projects require small and
medium-scale investments.
"Last year, the value of foreign investment approvals was very
high because eight of the approved projects were very large," he
said.
Foreign investment approvals rose by nearly 70 percent to
$39.9 billion last year from $23.72 billion in 1994. Last year's
surge was mainly due to large oil refinery and power generation
projects.
Sanyoto said that the eight oil refinery and power generation
projects alone were projected to require $12.9 billion in
investment, accounting for around 30 percent of last year's total
investment approvals.
He told the hearing that in the period between January and
Sept. 15, foreign investment approvals reached $24.61 billion,
"We are optimistic that the total value will reach $27 billion
by the end of this year," he said.
Domestic
But domestic investment approvals showed a healthier
performance in the first eight and a half months of this year.
Their value already exceeded last year's total approvals by
nearly 20 percent at Rp 82.50 trillion, he said.
Sanyoto said that like in the previous years, the projects
approved both under domestic and foreign investment schemes last
year were mostly in the manufacturing sector.
The realization of foreign investment projects in the period
between 1967 to Sept. 15, 1996, reached $43.35 billion or around
50 percent of the total cumulative value of the approved foreign
investment projects.
In terms of the number of projects, the realization rate was
much higher, reaching 72.37 percent of the approved investments.
In the domestic investment schemes, the realization of
projects in the period between 1967 and Sept. 15, 1996 totaled Rp
137.15 trillion, around 47 percent. In terms of the number of the
projects, the realization rate was 72.26 percent over the same
period.
The realization rate of investment projects is calculated on
the assumption that the project is carried out no more than two
years after the approval.
In the first two years of the current sixth five-year
development plan, which began in April 1994, the realization of
domestic investment projects reached Rp 56.59 trillion.
If the realization of the foreign investments is calculated in
rupiah, the total investment realization in the period between
April 1, 1994 and Sept. 15, 1996, was Rp 98.89 trillion or around
44 percent of the total investments of Rp 224.7 trillion expected
to come from private direct investments in the current five-year
development plan period.
Indonesia needs an investment of at least Rp 815.3 trillion to
achieve an average economic growth rate of 7.1 percent per annum
in the sixth five year development plan period. Of the total, Rp
224.7 trillion was foreseen to come from direct investments, both
domestic and foreign.
"We are optimistic that we will achieve the target before the
five-year development plan ends in March 1999," he told the
commission members. (hen)