Investment approvals up, boosting hopes of confidence revival
Investment approvals up, boosting hopes of confidence revival
Zakki P. Hakim, The Jakarta Post, Jakarta
Approvals for fresh domestic and foreign direct investment (FDI)
are on the raise, increasing optimism that a pickup in investor
confidence has finally started to set in.
On average, fresh investment approvals -- both from domestic
and overseas sources -- rose by 51 percent in the first semester
compared to the same period last year to Rp 80.85 trillion
(US$8.5 billion), the Investment Coordinating Board (BKPM)
announced on Tuesday.
BKPM chairman Muhammad Luthfi said FDI approvals during the
January to June period alone posted a jump of 72 percent to Rp
56.34 billion compared to the corresponding period a year
earlier.
New investment approvals in the chemical and pharmaceutical
industry led the advance with 21 projects valued at $2.6 billion,
ahead of the construction sector at 53 projects worth $540.7
million, he added.
Also included in the list of FDI approvals were 34 projects
worth $531 million in the transportation, warehousing and
communications sectors, 22 projects worth $520 million in the
mining sector and 34 projects worth $384 million in the food
processing sector.
The bulk of the FDI proposals came from Britain (50 projects
worth $989 million), Singapore (108 worth $591 million), Canada
(4 worth $553 million), the Netherlands (24 worth $374 million)
and Japan (32 worth $332 million).
With Indonesia still struggling to lure back investment in the
wake of the crisis, the BKPM data should provide some hope of a
return of foreign investment, which is badly needed to quicken
the pace of economic growth.
The country's FDI approvals reached their peak in 1995 with a
record $39.66 billion, but collapsed to $13.64 billion in 1998 as
a result to the Asian monetary crisis and ensuing political
turbulence here.
National Development Planning Board (Bappenas) chairwoman Sri
Mulyani Indrawati said the figures were encouraging, making the
government's full-year total investment target of Rp 179 trillion
attainable.
"Achieving 45 percent of the full-year target (by June) is
good enough," she said.
The government has targeted FDI approvals for this year at Rp
133.41 trillion ($14 billion) -- similar to what was achieved in
2003.
Other parts of the BKPM report show that domestic and foreign
direct investment realization rose 43 percent to Rp 39.7 trillion
in the first semester of this year compared to the same period
last year.
The increase was mostly attributable to a 70 percent increase
of FDI realization during the period to Rp 31.84 trillion --
equal to about 97 percent of the government's full year
realization target.
In total, domestic and foreign investment realization in the
first six months of the year provided jobs for 129,227 workers.
FDI realization alone provided 69,515 jobs, mostly in the
construction, chemical and pharmaceuticals, metals, machinery and
electronics, transportation, warehousing and communications, and
food processing sectors.
In an attempt to improve the country's investment climate, the
government has urged the BKPM to finalize the drafting of a new
investment bill that would slash the time needed to set up a
business from 156 days to only 30, and that would ensure proper
coordination among ministries.
Meanwhile, the government is also vowing to curb rampant
corruption and red tape, loosen rigid labor laws, improve tax
rates and administration, guarantee legal certainty and work to
improve the country's ailing infrastructure.