Foreign investments hits record high

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)