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)