Foreign investments hits record high

JAKARTA (JP): Foreign investments approved by the government during the first six-and-a-half months of this year jumped by 192.9 percent to a new record high of US$27.2 billion over the same period of last year, a minister said yesterday.

State Minister of Investment Sanyoto Sastrowardoyo said that domestic investments, however, recorded a 16.7 percent decrease to Rp 30.9 trillion ($13.7 billion), committed for 448 projects.

"This year, foreign investment approvals will surely create a new record high as the approvals for the last six-and-a-half months alone have surpassed last year's record," Sanyoto said after opening the seventh two-day convention of the Association of Indonesian Chemical Engineers at the Equatorial Hotel here.

Last year, direct foreign investments hit a record high of $23.7 billion for 449 projects, almost three times higher than the 1993 figure of $8.14 billion.

Sanyoto said that the realization rate of proposed foreign investment projects had also increased to nearly 60 percent so far this year, from 51.3 percent last year.

"The realization rate of foreign investments is quite high, as compared with the rate in China, which is only 27 percent," Sanyoto said.

He said that greatest interest for foreign investments this year was in the chemical industry, with 71 projects worth at $16.4 billion already approved.

He disclosed that one of the proposed foreign investment projects in the chemical industry was a second olefin center to be built in East Java with a total investment of some $2 billion. However, he declined to give details of the proposed project.

Indonesia's first olefin center in Cilegon, West Java, which is owned and operated by PT Chandra Asri Petrochemical Center, has sunk a total investment of $1.6 billion. The Cilegon olefin plant, with initial installed capacity of 1.3 million tons of olefin products, mainly ethylene and propylene, started trial production earlier this year.

Chandra Asri, controlled by politically well-connected business groups -- namely the Napan, Barito Pacific and Bimantara Groups -- has been the subject of prolonged debates because of its request to the government for significant tariff protection. However, up to now the government has not granted such protection to the company.

Wardijasa, chairman of the Association of Indonesian Chemical Engineers and also assistant to Sanyoto, said Indonesia still needs more olefin centers as the dependency of intermediary and downstream industries on olefin products, such as ethylene, propylene, polyethylene and polypropylene would be greater in the future.

Olefin products are raw materials for various downstream industries, including fiber and plastics.

The domestic demand for ethylene is projected to increase by 30 percent to 540,000 tons this year, for propylene to remain flat at some 125,000 tons, for polypropylene to rise by six percent to 371,000 tons and for polyethylene to increase by four percent to 547,000 tons. (rid)