Foreign investment up by 194%
JAKARTA (JP): Foreign investments approved by the government increased by 194 percent to a record high of US$23.7 billion this year, while domestic investments rose 34.9 percent to Rp 53.3 trillion ($24.2 billion), a minister announced yesterday.
"The drastic increase in investments, even though it was supported by the licensing of six large projects, indicates that the business climate in the country is conducive and quite attractive to investors," State Minister of Investment Sanyoto Sastrowardoyo told a news conference here yesterday.
The six large projects included three oil refineries, two power plants and an integrated steel mill with total investments of about $8 billion.
The figures on investments reported by Sanyoto include equities and loans.
The minister said that improvements in the country's infrastructure facilities and investment rulings, coupled with higher growth in the world economy and the global trend of trade and investment liberalization, have led him to believe that approvals of both foreign and domestic investments will increase further next year.
Sanyoto, who is also chairman of the Investment Coordinating Board (BKPM), said that Hong Kong has emerged as this year's largest foreign investor in Indonesia, with total investment commitments of $6.04 billion as of Dec. 15, followed by Britain with $2.95 billion, Taiwan with $2.48 billion, South Korea with $1.88 billion, Japan with nearly $1.53 billion and the United Sates with $1.52 billion.
However, in terms of cumulative investments since 1967 -- the year for the introduction of the law on foreign investment -- Japan remains the largest foreign investor in Indonesia with total approved investments of $18.62 billion as of Nov. 30, followed by Hong Kong with $14.14 billion, the United States with $8.65 billion, Singapore with $7.11 billion, Taiwan with $6.83 billion and South Korea with $5.49 billion.
These figures exclude the 14 projects worth $81 million whose licenses were revoked this year due to the failure of their sponsors to start construction within six years after their approvals.
Sanyoto said that the foreign investments approved this year are committed for the establishment of 449 projects, which will employ 316,809 Indonesians and 6,804 foreigners.
Only 36 percent of the foreign investment projects approved this year will rely on the domestic market. "Almost 64 percent of this year's foreign investment projects plan to export their products, with total foreign exchange revenues estimated at $13 billion per annum," he said.
He said this year's realization of foreign investment commitments, which received government approvals in the previous years, increased by 141 percent to $7 billion from merely $2.9 billion last year.
Domestic
Sanyoto said that the steady increase in domestic investments from Rp 29.34 trillion in 1992 to Rp 39.45 trillion in 1993 and to Rp 53.3 trillion this year also indicates that domestic sources of capital have strong foundations for business development.
He, however, acknowledged that this year's approvals of domestic investments have not reached the previous record high of Rp 56.51 trillion in 1990.
About 45 percent of this year's domestic investment projects rely on domestic market sales, while the other 55 percent plan to export their products to obtain total revenues of $13 billion per annum.
The realization of domestic investment projects increased by 30.4 percent to Rp 24 trillion this year from Rp 18.4 trillion in 1993.
Sanyoto said BKPM revoked licenses for 75 domestic investment projects worth Rp 2.6 trillion this year.
He acknowledged that the increasing domestic investments will need loan-assistance from domestic banks. "We hope domestic banks will be willing to support the investors' projects," he said.
He said foreign investors are expected to receive most of their loans from foreign banks. "But the government will surely continue monitoring the inflow of offshore borrowing so that they will not affect our balance of payments," he said.(riz)