Govt approves $7.14b in foreign investment

JAKARTA (JP): The government approved 344 foreign investment projects worth US$7.14 billion and 121 domestic investment project worth Rp 25.6 trillion (US$2.3 billion) in the April/August period of the 1998/1999 fiscal year.

State Minister of Investment Hamzah Haz told a hearing with the House of Representatives on Monday that the heated political tension in the country had affected the investment climate, especially in the aftermath of the massive riots in May.

"This situation is a serious problem for the country's economic development, and we need a special effort to cope with it," he told Commission V for investment, trade, industry, mining, manpower, and the environment.

During the May social unrest that rocked several cities across the country, at least five domestic investment companies and a foreign investment firm were burned in Jakarta, as were a domestic investment company and two foreign investment companies in West Java, and a foreign company in Central Java, he said.

At the same time, the deepening economic crisis had also significantly retarded the realization of investment projects.

The rupiah's collapse against the U.S. dollar affected domestic investors' realization plans because prices of capital goods and raw materials had increased sharply, he said.

The investors were restricted by their limited capital as soaring interest rates made it impossible for them to obtain credit from local banks, he said.

However, investment realization had not been stagnant, he said, adding that many of the domestic and foreign investors with good prospects had finished their projects and started commercial production.

From April to Sept. 15, 131 domestic investment projects worth Rp 4.27 trillion, as well as 187 foreign investment projects, with total investment commitments of $2.3 billion and Rp 400 billion, had been realized.

In the last fiscal year which ended in March, a total of 370 domestic investment projects worth Rp 21.4 trillion, and 268 foreign projects, with total investment commitments of $2.19 billion and Rp 3.73 trillion were realized, he said. (das)