RI behind China, Malaysia in foreign investment
RI behind China, Malaysia in foreign investment
JAKARTA (JP): Indonesia ranks third among countries in the
East Asian region after China and Malaysia in netting foreign
direct investment last year.
The World Bank Tables 1996: External Finance for Developing
Countries, released in Washington last week, states that
Indonesia got almost US$5 billion in foreign direct investment
last year, slightly below Malaysia, which received $6 billion,
but far below China with $38 billion.
"Foreign direct investment has surged in East Asia thanks to
rising opportunities, low risks and a take-off in flows from
overseas Chinese and Korean investors," Michael Walton, chief
economist for the World Bank's East Asia and Pacific region, said
in the report, a copy of which was made available here.
The Indonesian government's data show that foreign direct
investment approval reached $39.9 billion last year, up from
$23.7 billion in 1994. The government said the realization rate
of the commitments made by foreign investors has reached over 50
percent so far. The investment reported by the government
includes loans and equity.
The World Bank's report said foreign investment to developing
countries last year rose by 13 percent to a record $90 billion,
of which 60 percent went to East Asia.
Portfolio
In contrast to foreign direct investment, portfolio investment
to developing countries dropped to $56 billion last year from $84
billion in 1993.
The report said the main factors behind the decrease in
portfolio flows were the rise in U.S. interest rates beginning in
January 1994, the Mexico crisis in December 1995 and its
aftermath, the spectacular performance of the U.S. stock markets
last year and concerns about the overheating of East Asian
economies in the second half of last year.
Aggregate net resource flows to developing countries grew by
11.5 percent to a record $231.3 billion last year. East Asia and
the Pacific again ranked first with $108.3 billion, or 47 percent
of the aggregate flows.
Of the total flows, official capital rose to $64.2 billion
last year from $48.6 billion in 1994. However, most of the
increase was attributed to the Mexico rescue package, and the
underlying trends were far less promising, the report said.
"If these trends persist, the low-income countries will be the
most vulnerable since they will continue to lack access to
private capital markets," the report noted.
Private capital continued to dominate total capital flows to
developing countries last year at $167.1 billion, or 72 percent
of the total flow, down slightly from 76 percent in 1994 and 74
percent in 1993.
The large influx of private debt-creating flows and the Mexico
rescue package contributed to the 10 percent jump in the external
debt of developing countries, pushing it to over $2 trillion last
year.
The East Asia and Pacific region has the fastest growth in
external debt, with a 12 percent increase last year, compared to
the developing-country average of 8 percent.
The combined outstanding debt of countries in the East Asia
and Pacific region was an estimated $473 billion at the end of
last year, or 23 percent of the combined debts of all developing
countries, with China and Indonesia contributing the largest
portion.
Thailand and Malaysia were leading the growth of the external
debts in the region. Thailand's external debts were projected to
grow by 33 percent last year, while Malaysia's were expected to
grow by 24 percent.
According to Indonesia's Minister of Finance, Mar'ie Muhammad,
the Indonesian government's external debts dropped to $59.96
billion last December from $64 billion in May last year.
As the government's external debts tend to decrease, private
offshore borrowings, however, tend to increase, and the
government seems unable to control this. (rid)