IFC to boost its investment in RI
IFC to boost its investment in RI
Rendi A. Witular, The Jakarta Post, Jakarta
The International Finance Corporation (IFC) plans to boost its
investment in Indonesia despite the legal harassment it suffered
here over the past two years, according to its local
representative.
Newly-appointed IFC country manager for Indonesia German A.
Vegarra said on Thursday that for fiscal year 2003, which started
in June this year, the investment arm of the World Bank might
invest four to five times more than what it invested during the
previous fiscal year.
He said that IFC would focus its investments in the financial
sector, agribusiness, infrastructure, small and medium-sized
enterprises (SMEs), and extractive industries like mining, and
oil and gas.
"Over the last two years, the IFC has faced serious legal
hurdles which drove down investment activity in fiscal year 2002
to just US$21 million. If there are no significant obstacles for
us in the next year, we plan to increase our investments," said
Vegarra, adding that the investment firm was still optimistic
about the economic prospects of the resource-rich country.
Vegarra said that fiscal year 2002 was a disaster for IFC in
Indonesia since all of its resources were focussed on dealing
with battles in the local courts.
He described fiscal 2002 as an "abnormal" year for the IFC in
its operations in Indonesia.
"In a normal fiscal year, our investment in Indonesia can
reach US$400 million to 500 million," said Vegarra, a Peruvian
national.
One example of the legal harassment encountered by the IFC
here was the Manulife Indonesia case in which the local unit of
the giant Canadian insurance firm was controversially declared
bankrupt by the Central Jakarta Commercial Court. But after
strong protests from various sides, including the Canadian
government, the Supreme Court annulled the bankruptcy ruling in
June.
The IFC owns about 9 percent of Manulife Indonesia.
The IFC's grand strategy for empowering the country's SMEs is
to set up a $25 million SME facility in the eastern part of
Indonesia. The facility will provide technical assistance to the
SMEs, including how to seek bank loans and to become export-
oriented firms.
The IFC will also invest in the country's ailing textile
industry to help the strategic sector regain its competitiveness
on the international market.
"We see that Indonesia has a huge raw materials supply, strong
supporting industry, and low labor wages. With capital support,
we expect that the ailing textile industry will be heaved in the
near future," said Vegarra who refused to disclose the planned
investment figure.
Since 1956, the IFC has invested US$2.2 billion in Indonesia,
which makes the country its sixth largest exposure. The IFC
portfolio in Indonesia includes 35 companies.
On Oct. 21, the corporation will host the second private
sector forum, which is aimed at enhancing dialog between the
country's private sector and the government so as to improve the
investment climate.
The forum is part of the pre-Consultative Group on Indonesia
(CGI) events. The CGI groups the country's traditional lenders
and will meet later this month in Yogyakarta to decide on a new
loan for Indonesia.