Foreign investments may go up by more than 100% this year

JAKARTA (JP): Foreign investments are expected to more than double to US$20 billion this year from $8.1 billion last year, State Minister of Investment Sanyoto Sastrowardoyo said.

"During the first seven months of this year, foreign investment commitments approved by the government reached $14.7 billion," Sanyoto told reporters after closing a three-day annual meeting on investment coordination here last night.

Last year's figure on foreign investment indicated a sharp decline from $10 billion in 1992.

Sanyoto, who is also chairman of Investment Coordinating Board (BKPM), said that domestic investments are likely to increase sharply this year as well.

Domestic investment commitments approved in the first seven months of this year have reached Rp 33.2 trillion, he added.

Affected by the impact of the government's tight money policy, domestic investments steadily declined from Rp 56.5 trillion ($26 billion) in 1990 to Rp 41 trillion in 1991 and to Rp 29.3 trillion in 1992 before increasing back to Rp 39.4 trillion last year.

"I am very optimistic that investment commitments will continue increasing in the future, thanks to a series of deregulatory measures introduced by the government in the last few years," Sanyoto said.

The most recent deregulatory measures raised the ceiling of foreign equity ownership and allows foreign investors to build and operate infrastructure facilities, including ports, power generation, telecommunications, shipping, civil aviation, transportations, railway, water supply, education and mass media.

Coordinating Minister for Economy and Finance Saleh Afiff said in his opening address to the annual meeting on Monday that the government is now preparing other deregulatory measures which will give more authority to local administrations in dealing with licensing procedures.

Attractive

Sanyoto said the latest deregulatory measures have made Indonesia more attractive to foreign investment than China, India and Vietnam.

However, Sanyoto acknowledged that long licensing procedures in local administrations have remained the main problem for investors.

"But, after the meeting, we are committed to resolving problems related to arduous licensing procedures," he said.

Sanyoto said this year's BKPM's programs will also include the promotion of business expansion in eastern provinces of the country.

"North Sulawesi, for example, will have two new cement plants that will become operational next year with a total production capacity of 1.75 million tons a year," he said, adding that a U.S. company also plans to set up a coal-fired power plant with a capacity of 110 megawatts (MW) in North Sulawesi.

These projects are expected to spur economic growth in the eastern part of the country and to support cooperation among Indonesia, Brunei, the Philippines and Malaysia under a scheme called the East ASEAN Growth Area (EAGA).

He said an oil refinery will also be set up in Irian Jaya later this year.

The minister said BKPM will also improve the management of its provincial offices because many investors have violated regulations due to lack of control.

Out of the approximately 500 investment projects approved by the government in 1993-94, 148 are suspected of violations, including the operating of used machines and the selling of plant equipment without prior acknowledgment, he said.

He said the board also revoked licenses for 209 projects last year due to shortage of funds, business unfeasibility and lack of raw materials. (fhp)