Investment may drop 50% this year: BKPM

JAKARTA (JP): The Investment Coordinating Board (BKPM) predicted on Tuesday that both foreign and domestic investment in the country would fall by 50 percent this year and would remain flat next year.

The board's deputy chairman, Sugihono Kadarisman, said his office had approved 743 foreign direct investment projects worth US$12.63 billion and 248 domestic investment projects worth Rp 55.06 trillion ($6.1 billion) as of the end of September this year.

As comparison, foreign investment approvals reached $33.8 billion in 1997, $29.9 billion in 1996 and $39.9 billion in 1995, while domestic investment approvals stood at Rp 119.87 trillion in 1997, Rp 100.7 trillion in 1996 and Rp 69.9 trillion in 1995.

"I think this year is the worst of Indonesia's political and economic situation, and next year our position should start to improve," he said.

"Next year, I guess there will be a slight rise in the value of investment. At the very least, the value will equal that of this year's."

BKPM, however, does not license nor record investment in the oil and gas sector. The licensing of investment projects in this sector is done by the Ministry of Mines and Energy.

Sugihono noted that despite the fall in the value of foreign investment, their numbers could increase this year, indicating strong interest among foreign investors in investing in the country.

As of the end of last month, foreign investment totaled 743 projects, compared with 790 projects approved for the whole of 1997.

However, the majority of foreign investment projects approved this year, about 429 projects worth $7.4 billion, were all domestic market-oriented.

Only 314 foreign investment projects worth $5.23 billion were export-oriented projects, Sugihono said, compared to the 402 export-orientated foreign investment projects approved last year worth $11.47 billion.

Some of the foreign investment projects approved this year were for work in food crops, plantations, live stock, fishery and mining. These were part of the primary sector, he said.

Other projects were in the manufacturing sector, including in food, textile, wood, paper, chemical, non-metallic minerals, basic metals, metal goods.

Sugihono added that a number of firms had also entered the service sector. (29)