Investment may drop 50% this year: BKPM

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)