Realized, approved investment on the rise, BKPM says

Urip Hudiono, The Jakarta Post, Jakarta

Investment in the country has remained strong despite rising inflation and interest rates, the latest data from the Investment Coordinating Board (BKPM) says.

The BKPM said on Tuesday actual foreign direct investment (FDI) during January to October had more than doubled to US$8.55 billion in 785 projects, from $3.23 billion in 421 projects for the same period last year.

Realized investments in the transportation, warehousing and communications sectors made up the lion's share of the figure, with 48 projects valued at $2.93 billion. Following were 37 projects worth $1.12 billion in the chemical and pharmaceuticals industry, and 31 projects worth $896 million in construction.

Domestic investments until October, meanwhile, grew by 36 percent to Rp 16.63 trillion (some $1.66 billion) on 178 projects, as compared to Rp 12.19 trillion on 88 projects during the same period last year.

Local investors had mostly favored the food processing industry (with 31 projects worth Rp 3.39 trillion), as well as the construction sector (four worth Rp 2.46 trillion), and the farming and plantation sector (12 worth Rp 2.11 trillion).

Total domestic investment and FDI amounted to Rp 102.13 trillion for the period and provided jobs for 226,096 workers.

This is an increase from the third quarter report last month of Rp 84.5 trillion in total investments and 197,643 employed workers.

In other areas, BKPM figures show that domestic and FDI approvals as of October increased by 22 percent to 156.6 trillion on 1,569 projects from the same period last year, with FDI approvals alone rising by nearly 22 percent to $11.19 billion.

The government is targeting Rp 179 trillion worth of domestic and FDI approvals for 2005, with at least Rp 50.1 trillion expected to be realized within the year.

BKPM's figures exclude investments in the oil and gas industry and in banking and non-bank financial institutions, as these licenses are issued by other government agencies.

And the poor performance of banks may explain why the Central Statistics Agency (BPS) reported that overall growth in Indonesia's investment sector -- which currently makes up 21 percent of the country's gross domestic product (GDP) -- had slowed during this year's third quarter, to 9.18 percent from 14.54 percent in the second.

Indonesia has been struggling to lure back overseas investments -- which peaked at $39.66 billion in 1995, before faltering to $13.64 billion following the 1997-1998 Asian crisis -- to help spur on economic growth and create more jobs.