Investors told to enter eastern provinces

Investors told to enter eastern provinces

JAKARTA (JP): A minister urged investors yesterday to expand
their activities to eastern Indonesia and improve links between
big and small businesses to create a harmonious and efficient
investment environment.

At a communication forum between government officials and
businesspeople, State Minister for Investment Sanyoto
Sastrowardoyo said investment in eastern Indonesia would help
reduce the concentration of business activities in Java and help
development in eastern provinces.

According to the Investment Coordinating Board, 64 percent of
domestic investment between 1967 and 1996 and 64.5 percent of
foreign investment went to West Java, Greater Jakarta, East Java
and Central Java.

So most of Indonesia's Rp 452.4 trillion (US$188.3 billion)
Gross Domestic Product came from Java and Sumatra.

The chief of the Ministry of Finance's Agency for Finance and
Monetary Analysis, Marzuki Usman, said investors preferred to put
their money in big, capital intensive cash-cow businesses like
the paper, plywood, chemical, pharmaceutical and metal
industries, electricity generation, service and trade.

So commercial banks tended to provide more credit for those
sectors, he said.

Financial credit for manufacturing industries, for example,
steadily rose from Rp 5.4 trillion in 1983 -- when the government
introduced its first deregulatory measure in the financial sector
-- to Rp 78.9 trillion in 1996.

Credit for the service industry rose from Rp 1.4 trillion to
Rp 91.6 trillion and for the trade industry rose from Rp 4.8
trillion to Rp 70.6 trillion.

Credit for the agriculture sector increased slowly from Rp 1.2
trillion in 1983 to Rp 17.6 trillion in 1996.

Consequently, the agricultural sector grew slowly -- 4 percent
in 1995 -- while the manufacturing industry expanded steadily --
11.1 percent in 1995. (10)