Governemt cautious over latest trend in investment

Governemt cautious over latest trend in investment

Jakarta (JP): The government yesterday expressed cautious
optimism concerning the latest trend in foreign and domestic
investments despite the marked increase in new commitments
approved in the first five months of this year.

Minister for Investment Development Sanyoto Sastrowardoyo told
newsmen after a meeting with President Soeharto that foreign
investment plans approved during the January-May 1994 period
notched a total value of US$5.1 billion distributed among 144 new
projects, up 24 percent from the US$4.1 billion in the
corresponding period of 1993.

"The figure brought the cumulative foreign investments
approved since 1967 to a total of US$74.9 billion in 2,879
projects," Sanyoto added.

The total does not include foreign investments in the oil
industry or financial sector.

Domestic investments licensed in the same five-month period
reached Rp 24.7 trillion (US$11.4 billion) for 356 new projects
compared to Rp. 12.2 trillion in the corresponding period last
year, he added.

For both categories of investments, 62 to 65 percent of the
projects will be located on Java island, Sanyoto said alluding to
the government bid to encourage new investments in the country's
eastern region.

"I am optimistic that foreign investment commitments this year
will exceed US$10 billion, compared to $8.1 billion last year,"
Sanyoto said.

However, not all of the investment commitments have been
implemented despite government encouragement, Sanyoto said.

"Of the domestic investment commitments, only 73.8 percent
have been implemented," he said.

There has been a better picture in the foreign investment
arena where 51.3 percent of the US$74.9 billion investment
commitment has been realized, he added.

Petrochemical

Sanyoto said five foreign investors are planning big projects
in the petrochemical industry, including oil refineries, which
are now under evaluation. Money invested in the projects could
reach more than US$5 billion.

He said he became more optimistic about new investment
commitments after the recent issuance of the new deregulation
measure that eased divestment rules and capitalization
requirements and opened many new areas to foreign investors.

Commenting on rivalry with other countries for foreign
capital, he said Indonesia is working to "consolidate" by
creating a more conducive investment climate.

"And I estimate we are steady, with the annual average of $8.9
billion in new foreign investment commitments," he said.

Sanyoto attributed the bullish trend in domestic capital
investment to the government decision to ease its tight money
policy last year, which was followed by the lowering of interest
rates.

Sanyoto said that during their meeting, President Soeharto
made known his wish that foreign investors be invited to seminars
in Indonesia to balance the flow of Indonesians traveling abroad
for similar purposes.

The President asked Sanyoto to encourage foreign investors to
come to Indonesia to see for themselves the marks of the
country's economic progress as a way of building confidence.

Sanyoto is scheduled to take part in a seminar on investment
in Hong Kong later this month.(man)