Number of investors begins to climb in city

Muninggar Sri Saraswati, The Jakarta Post, Jakarta

Though the amount of foreign investment coming into the capital has increased over the last two years, it still has not returned to pre-1997 levels. And with the continued economic uncertainty, Jakarta will be hard pressed to lure back foreign investors.

City spokesman Muhayat said on Monday that those investors who were coming into the city were interested particularly in the service and consultancy business.

But he said that the total amount of foreign investment in Jakarta had dramatically decreased following the riots and the economic crisis that hit the country in 1997, and had yet to return to its pre-1997 levels.

The capital recorded US$847,000 in foreign investment in 1997, compared to $3.7 million the previous year, according to data from the city's investment agency.

More than 120 of 294 foreign-funded business projects were suspended in 1997.

In 1999, the investment flow continued to decline, reaching about $700,000 with 306 projects. But in 2000, these figures increased to $1.3 million with about 600 projects and continued to increase to $1.4 million in 2001.

Since January this year, eight new foreign investors opened businesses here. Over the same period last year, there were six new investors.

Business has not resumed to the pre-riot levels because of several factors, including the political and security situation, Muhayat told The Jakarta Post.

The secretary-general of the Indonesia Employers' Association, Djimanto, said some foreigners were interested in developing service and consultancy businesses because such businesses carried less risk.

"They don't need a lot of capital and the business is not too risky. Investors can profit from the business," he said.

Djimanto said many investors without fixed assets such as factories immediately left the country following the May riots in 1997.

"Investors who had fixed assets stayed since they could not move their businesses just like that," he said, adding that they have since gained a local market for their goods.

However, Djimanto said these investors still preferred not to expand their businesses here, because there were many other cities abroad that offered them a better business environment than Jakarta.

Many foreign investors used to complain about the complicated procedures for establishing a business here, Djimanto said, but the investment agency improved its services in 1998.

"In fact, the city has a good market for service businesses. But the city administration must increase its efforts to attract foreign investors back here. Otherwise, the total amount of foreign investment will never reach the same levels as before the riots," he said.