Fri, 30 Jul 2010

TEMPO Interactive, Jakarta:The Investment Coordinating Board (BKPM) chairman, Gita Wirjawan, said the regional champion program launched at the beginning of this year has managed to attract domestic and foreign investors. Regional champions are areas judged to be capable in helping other areas in initiating progressive investments.

The provinces included in the program are Riau, South Sumatra, West Java, East Java, East Kalimantan, West Nusa Tenggara, and Papua. "Foreign investors are looking at East Java and Papua," Gita said in Jakarta yesterday.

Until the second trimester of 2010, new investment in Papua has totaled US$ 200 million through eight projects. Meanwhile, investments in East Java totaled US$ 500 million with 29 projects. However, the most number of new foreign investments based on areas was taken by Jakarta, with a total of US$ 1,9 billion for 370 projects. “But Jakarta is not a regional champion,” he said.

In the mean time, domestic investments in the second quarter of this year has amounted to US$ 15, 2 trillion, mostly going to regional champion provinces. East Java is on the first place with Rp 1,5 trillion worth of investments, followed by East Kalimantan with Rp 3,7 trillion, West Java with Rp 1,5 trillion, and Riau with Rp 800 billion.

According to Gita, this shows that capital distribution has gone outside the capital cities, which so far was dominated by Java island. However, capital distribution has not been equirable because 80 percent of capital placement for the last five years has been in Java. “We must encourage investments outside of Java,” he added.

With regards to the flow of investment, Gita said there was an investment of US$10 billion made in the second semester of this year. There were three significant foreign investment commitments signed during this period. One of them was a commitment with Pohang Iron and Steel Company (Posco) from South Korea, which will establish a joint venture with Krakatau Steel.

Gita said foreign investments in Indonesia are expected to move towards industrialization and manufacturing. Meanwhile, domestic investments will be aimed at small and medium scale sector development.