Government backs Australian investment

JAKARTA (JP): Indonesia will protect and secure Australian investment despite the deteriorating political relations between the two countries, a senior official of the Investment Coordinating Board (BKPM) said on Thursday.

"Until now, I have not heard any reports of any Australian investment venture being damaged," BKPM vice chairman Andung A. Nitimihardja said on the sidelines of a meeting of BKPM and its provincial offices (BKPMD).

Andung said the government was responsible to ensure the safety of Australian investment.

Although no new Australian investment project was approved in the last month, he said there was also no cancellation of an investment project by Australian companies.

According to BKPM, the first eight months of 1999 recorded the licensing of 38 Australian investment projects worth US$2.28 billion, of which more than $2 billion were earmarked for electricity, gas and water.

He hoped the tension in bilateral relations would only be temporary.

Anti-Australian sentiment is growing in Jakarta and other parts of the country, especially in Balikpapan, East Kalimantan, which is host to many Australian mining companies.

Australia's two biggest resources and mining groups, Broken Hill Proprietary Co. and Rio Tinto Ltd. (RTP) pulled their staff and their families out of Indonesia last week as tensions between the two countries built over the crisis in East Timor.

Andung foresees a strong growth in foreign investment after the presidential election in November.

Indonesia posted a 50 percent drop in approved foreign investment to $5.88 billion in the first eight months from $11.7 billion in the same period last year due to political uncertainty, he said.

"Indonesia should restore political stability to woo back foreign investors," he said.

The establishment of a new government after the presidential election is expected to return stability in the country, he said.

Andung said Indonesia was fundamentally more attractive for foreign investors than any other Asian country but the current political situation was not conducive for investment.

Andung said many investors from Europe, Asia and America expressed their intention to invest in Indonesia once the political situation was back to normal.

"President B.J. Habibie has in principle approved the granting of a tax holiday incentive for foreign investors," he said, adding that the details of the facility were being finalized at the BKPM.

Andung added that a government ruling that would fully empower the BKPMD to license foreign and domestic investment projects would be finalized this week.

"BKPM will expedite the licensing procedures," he said. (02)