Good prospects for industries with local content: Sanyoto
Good prospects for industries with local content: Sanyoto
JAKARTA (JP): Industries relying predominantly on local
resources and with strong export potential will be the most
prospective investment sectors this year, a senior official has
said.
State Minister for Investment Sanyoto Sastrowardoyo said these
sectors include agriculture-based businesses such as plantations,
fishery and agro-industry.
The furniture industry would also remain a potential sector to
invest in, he said.
Industries which use import components but export most of
their products, such as electronic components and automotive
parts, would also remain attractive for investors, he told
journalists in a year-end briefing on Monday.
Investors could also count on the tourism sector, including
hotels and resorts, and service industries such as tourism
agencies, consultancy, marketing and management services, he
said.
Ground and water transportation services also had potential.
"Overall, these sectors are the smart investments next year
(1998)."
Improving economies of developed nations such as the United
States and European countries, and the restructuring of global
businesses would further stimulate economic activities this year,
he said.
Sanyoto, who is also the chairman of the Investment
Coordinating Board (BKPM), predicted the currency turmoil, which
has caused a drop in the rupiah's value by about 60 percent
against the U.S. dollar since July, would remain a major problem
for most investors in the country.
He said that due to the high fluctuation in the value of the
rupiah, industries relying on imported components would have
problems in making projections on their production costs.
But Indonesian goods would be more competitive in overseas
markets due to the depreciation, he added.
"This is also a chance to boost the development of the import
substitution industry."
The government would continue to make the investment climate
conducive for both foreign and local investors, he said, adding
that this would include giving incentives to boost investments.
Sanyoto said the investment growth faced both external and
internal challenges.
He said the interdependency of global economies had made the
economies more fragile, while regional cooperation led to them
being more exclusive.
The trend toward trade and investment liberalization and
pressure from developed countries for early liberalization also
adversely affected countries like Indonesia.
Competition became tighter to lure foreign investment,
especially because some countries embarked on offering attractive
incentives, he said.
Concurrently, the investment climate was not fully conducive
to foreign investment, he said.
Investment had not been spread equally, and downstream and
upstream industries were not balanced.
Underdeveloped business partnerships had slowed targets to
improve investment in the country, he said.
Poor infrastructure and red-tape, especially in the provincial
and lower level administrations, also impeded investment, he
said.
Sanyoto added that high interest rates and inadequate human
resources continued to be obstacles to investment. (das)