Investors get two-year extension to start projects

Investors get two-year extension to start projects

JAKARTA (JP): The government has decided to grant a two-year
extension to local and foreign investors facing difficulty in
starting their projects on time, State Minister for Investment
Sanyoto Sastrowardoyo said yesterday.

Sanyoto, also the chairman of the Investment Coordinating
Board, told a hearing of the House of Representatives that
investors having difficulty should apply for the extension from
the ministry.

Investors who are granted permits for projects are normally
required to start their project within three years.

Sanyoto said several companies had already applied for the
extension.

"Until the economy returns to normal again, we are taking a
lenient approach to investment firms that cannot meet their
deadlines," he told members of House Commission V for manpower,
trade and investment.

Sanyoto said some investors and companies had had to delay the
implementation of their commitments due to the currency crisis,
which has seen around a 35 percent drop in the value of the
rupiah since July.

Over 90 percent of the investors' funds did not come from
their own equities but from bank loans, most of which were from
offshore banks, he said. Dollar appreciation has inflated the
loan values, he said.

The tight monetary policy imposed by the government to defend
the rupiah had also shot up the credit interest rates in local
banks, thus lowering demand for loans to finance the projects, he
said.

Sanyoto said he expected the rate of investment this year and
next year to decline because of the economic slowdown.

He did not detail the likely decline, saying the ministry had
no way of predicting it at this stage.

"Between 1992 and this year, an average of 47 percent of the
investment commitments had been made by local investors, while 53
percent were made by foreign investors every year," he said.

"But the economy will continue to be uncertain, so that we
would not expect the starting rate between last July and next
March to be anything like that in the past four and a half
years," he said.

The ministry expects an inflow of foreign and domestic
investment of around Rp 224.7 trillion (US$61.41 billion) during
the sixth five year development plan, which will end on March 31,
1999.

Sanyoto said investors' enthusiasm to make commitments had not
declined, despite the monetary crisis.

Between January and Nov. 8, local investors had committed to
Rp 110 trillion in investments in the country, and foreign
investors $29.6 billion, he said.

In the whole of last year, local investors committed about Rp
100.7 trillion and foreign investors $29.9 billion, he said.

Investment commitments increased by Rp 3.18 trillion in
October from the previous month, to Rp 17.58 trillion for 149
projects.

Foreign investors made up $4.88 billion of the commitment and
local investors Rp 12.7 trillion, he said. (das)