Foreign investment starts coming back

After years of slumping, foreign direct investment in Indonesia has started to gain ground amid an improved confidence in doing business in the country.

Business activities have begun to increase, as seen in the sharp increase in the amount of money spent to set up new businesses during the first seven months of the year.

According to data from the Investment Coordinating Board (BKPM), the value of realized foreign investment from January to July nearly doubled to US$4.9 billion from $2.49 billion in the same period last year, exceeding the $4.57 billion recorded in all of 2004.

In terms of the number of projects, realized foreign investment during the January to July period rose 90 percent to 566 projects from 300 projects in the same period the previous year.

Foreign investors seem to be more enthusiastic about investing here, as indicated in the amount of money they spent during the first seven months of the year. The value of realized domestic investment in the same period was almost unchanged.

Although in terms of the number of projects, domestic investment rose more than 100 percent to 137 projects from 65 projects in the previous period, their total value only rose slightly to Rp 9.69 trillion from Rp 9.39 trillion.

The majority of the foreign investment projects were located in West Java, with a total value of $1.79 billion and 124 projects, Greater Jakarta ($1.23 billion, 209 projects), East Java ($552.2 million, 30 projects), Banten ($511.5 million, 47 projects) and South Sumatra ($123 million, three projects).

A similar trend was seen in the approval of fresh investment projects. According to data from the BKPM, foreign investment approvals rose 80 percent to $6.63 billion (949 projects) from January to July of this year, from $3.71 billion (713 projects) in the same period last year.

Domestic investment approvals surged to Rp 31.51 trillion (136 projects) from Rp 28.71 trillion (120 projects).

With Indonesia still struggling to lure back investment, the BKPM data should provide fresh hope of a return of foreign investment, which is badly needed to quicken the pace of economic growth. --The Jakarta Post