Indonesia still attractive for foreign investors: Minister

JAKARTA (JP): State Minister for Investment Sanyoto Sastrowardoyo remains bullish on foreign direct investment flows despite expected political tension come May's general election.

Sanyoto told a year-end press conference that there was no correlation between the general election and investment.

"I don't see any relationship between the general election and foreign investors' interests in Indonesia," he said. "The election, which is held every five years here, is just a normal political practice."

The May general election will elect most of the House of Representatives and almost half of the People's Consultative Assembly, which will elect the President and Vice President in March 1998.

Most private sector analysts are also upbeat on national economic prospects despite the election.

They believe the ruling Golkar grouping will enjoy a landslide victory or at least maintain its control of the legislature.

Sanyoto cited the steadily rising incomes of the population as one factor which would continue to encourage domestic and foreign investment.

The country's per capita income of around US$1,000 is still among the lowest in Southeast Asia. But its steady robust economic growth of more than 7 percent a year is expected to turn the country into a major market within the next few years.

Sanyoto, also the chairman of the Investment Coordinating Board, said the government's pledge to keep introducing deregulatory and bureaucratic reforms would help improve the investment climate.

Sanyoto said a shortage of skilled workers rather than political factors was more likely to discourage foreign investors.

"Limited technology, poor marketing access, poor infrastructure outside Java and arduous regulations will also discourage foreign investors," he said.

Investment approval data released by the board yesterday showed that 959 foreign investment projects were approved in 1996, up 20 percent on 799 approvals in the previous year. But in terms of value, approved foreign investment fell 25 percent this year to US$29.9 billion, from $39.9 billion last year.

The decline occurred because not as many big projects were approved this year, he said.

Sanyoto could not give accurate figures on project implementation rates because most investors had not reported to the board after obtaining their licenses.

In the past, between 45 and 50 percent of licensed projects have been realized. (icn)