German investments expected to start recovering next year
German investments expected to start recovering next year
JAKARTA (JP): Direct investment by German corporations in
Indonesia, which plunged over the past two years because of the
economic crisis, will begin to recover next year, a German
Embassy official said on Tuesday.
"The crisis in Indonesia is bottoming out. I am optimistic
that German investment will increase starting in 2000," Michael
Witter, head of the embassy's economic department, told The
Jakarta Post.
A number of German companies continued to invest in Indonesia
despite the crisis, he said after the signing of a memorandum of
understanding between the Indonesian Investment Coordinating
Board (BKPM) and the German Investment and Development Company.
Under the agreement, the two institutions will jointly promote
Indonesia to potential German investors.
Witter said German investors could not be steered by the
government, but had to be convinced themselves of the
opportunities, making an investment institution necessary.
"Indonesia is a special case compared to other Asian countries
hit by the crisis. It was not only facing a financial crisis, but
it was also entering a new phase of political transition," he
said.
BKPM deputy for foreign relations Aiyub Mohsin said the value
of German investments approved by his agency this year should at
least equal the US$71 million approved in 1998.
BKPM figures show total German investment proposals approved
in the first seven months of 1999 reached $34.25 million. Some
$4.47 billion of investment by German companies was approved in
1997, the year the crisis hit.
Germany ranks ninth as the largest source of foreign direct
investment in Indonesia, with $9.74 billion. It trails Japan,
Britain, Singapore, Hong Kong, the United States, Taiwan, the
Netherlands and South Korea, according to the BKPM, which
compiles foreign investment figures in the nonoil and nonbank
sectors.
The plunge in German investment reflects an overall decline in
foreign investment in Indonesia.
BKPM said it approved $2.12 billion in investment projects in
the first seven months of 1999. It approved $13.56 billion in
1998 and $33.83 billion in 1997.
Not all approved projects are realized, but Aiyub said the
realization rate by German investors was among the best at 80
percent.
Separately, State Minister of Investment Marzuki Usman, who
also heads BKPM, said on Tuesday President B.J. Habibie was
expected to issue a decree within two weeks authorizing regional
BKPM offices to grant investment licenses in their respective
areas.
This would ensure a cheaper, easier, quicker, more timely and
transparent process, Marzuki said during a seminar on investment
opportunities in the agribusiness sector in the provinces of
Sulawesi and Nusa Tenggara.
To reverse the fall in foreign investment, the government was
considering providing more incentives, including tax holidays,
for investors, he said, adding that this would entail reviewing
existing tax laws.
He said many countries in Asia, South America and Africa used
tax incentives to woo foreign investors, chiefly from the United
States, Japan, South Korea, Taiwan, Germany and Britain.
"We are facing tight competition. We're no longer the
beautiful lady in the region," he said. (02/01)
JAKARTA (JP): Direct investment by German corporations in
Indonesia, which plunged over the past two years because of the
economic crisis, will begin to recover next year, a German
Embassy official said on Tuesday.
"The crisis in Indonesia is bottoming out. I am optimistic
that German investment will increase starting in 2000," Michael
Witter, head of the embassy's economic department, told The
Jakarta Post.
A number of German companies continued to invest in Indonesia
despite the crisis, he said after the signing of a memorandum of
understanding between the Indonesian Investment Coordinating
Board (BKPM) and the German Investment and Development Company.
Under the agreement, the two institutions will jointly promote
Indonesia to potential German investors.
Witter said German investors could not be steered by the
government, but had to be convinced themselves of the
opportunities, making an investment institution necessary.
"Indonesia is a special case compared to other Asian countries
hit by the crisis. It was not only facing a financial crisis, but
it was also entering a new phase of political transition," he
said.
BKPM deputy for foreign relations Aiyub Mohsin said the value
of German investments approved by his agency this year should at
least equal the US$71 million approved in 1998.
BKPM figures show total German investment proposals approved
in the first seven months of 1999 reached $34.25 million. Some
$4.47 billion of investment by German companies was approved in
1997, the year the crisis hit.
Germany ranks ninth as the largest source of foreign direct
investment in Indonesia, with $9.74 billion. It trails Japan,
Britain, Singapore, Hong Kong, the United States, Taiwan, the
Netherlands and South Korea, according to the BKPM, which
compiles foreign investment figures in the nonoil and nonbank
sectors.
The plunge in German investment reflects an overall decline in
foreign investment in Indonesia.
BKPM said it approved $2.12 billion in investment projects in
the first seven months of 1999. It approved $13.56 billion in
1998 and $33.83 billion in 1997.
Not all approved projects are realized, but Aiyub said the
realization rate by German investors was among the best at 80
percent.
Separately, State Minister of Investment Marzuki Usman, who
also heads BKPM, said on Tuesday President B.J. Habibie was
expected to issue a decree within two weeks authorizing regional
BKPM offices to grant investment licenses in their respective
areas.
This would ensure a cheaper, easier, quicker, more timely and
transparent process, Marzuki said during a seminar on investment
opportunities in the agribusiness sector in the provinces of
Sulawesi and Nusa Tenggara.
To reverse the fall in foreign investment, the government was
considering providing more incentives, including tax holidays,
for investors, he said, adding that this would entail reviewing
existing tax laws.
He said many countries in Asia, South America and Africa used
tax incentives to woo foreign investors, chiefly from the United
States, Japan, South Korea, Taiwan, Germany and Britain.
"We are facing tight competition. We're no longer the
beautiful lady in the region," he said. (02/01)