Japanese investment grows despite 'national car' dispute
Japanese investment grows despite 'national car' dispute
JAKARTA (JP): State Minister of Investment Sanyoto
Sastrowardoyo said yesterday that Japanese investments in the
country continue to increase, despite Japan's objection to
Indonesia's "national car" policy.
Sanyoto told reporters after meeting with President Soeharto
that Japanese investments approved by the government during the
period between January and June 27 reached US$4.9 billion in
value, or nearly 40 percent above the total investment
commitments of $3.5 billion made by the Japanese last year.
He said Japan's high investment commitments in the first
semester of this year indicated that Japanese investors remain
confident in Indonesia's business climate.
"It clearly shows us that concerns about a possible decline in
the Japanese investments were completely wrong," he said.
Such concerns surfaced after the government granted a pioneer
status in February to Timor Putra, owned by Soeharto's youngest
son, Hutomo Mandala Putra, to produce a "national car" in
cooperation with Kia Motor of South Korea. The status would allow
Timor Putra to receive special tax facilities, including the
exemption of import duties and luxury taxes.
The tax incentives, which will last for three years, will
enable the company to sell its 1,600cc car at half the price of
Japanese makes of the same class.
Major automobile giants from Japan, the United States and
Europe demanded that the Indonesian government revise the
"national car" project, saying that the exclusive treatment given
to Timor Putra is against the free trade principles set by the
World Trade Organization.
They said that the unfair car policy could also discourage
foreign investments, especially those from Japan.
Sanyoto said yesterday that most of the Japanese investment
commitments were made a few weeks after the government announced
the new car policy.
Japan is the largest investor in Indonesia, followed by
Britain, Hong Kong and the United States.
"If Japanese investors halt their investments in Indonesia,
they will miss the chances," he said. "If they did not come,
other foreign investors would come in and take their places."
The total foreign investment approvals in the period between
January and June 27 rose by 8 percent to US$20.9 billion from
$19.4 billion in the same period of 1995.
Sanyoto said that foreign investment approvals, which rose by
nearly 40 percent in 1995 to $39.9 billion, were expected to book
a flat growth this year.
"We hope this year's investment approvals would be the same as
last year," he said.
Unlike foreign investments, domestic investment approvals grew
much faster in the first semester, rising by 120 percent to Rp
64.2 trillion from Rp 28.8 trillion in the same period of 1995.
"The domestic investments approved in the January to June
period reached almost last year's level of Rp 69.9 trillion," he
said, adding that the majority of the new domestic investment
approvals are directed to plantations.
Sanyoto said that the new domestic investment projects are
expected to open job opportunities for around 1,290,000 workers,
far more than the 342,000 jobs expected from the domestic
investment projects approved in the first semester of last year.
Most of the new investment commitments are targeted for paper
manufacturing, plantations, food processing, housing, industrial
estates, power generation and the hotel industry. (hen)