Seven projects bring investment record of $22b
JAKARTA (JP): Plans to establish seven large projects will bring foreign investments to a new record high of US$22 billion this year, State Minister for Investment Sanyoto Sastrowardoyo said here yesterday.
Sanyoto, also chairman of the Investment Coordinating Board (BKPM), noted that this year his office has approved 301 foreign investment projects with a total value of US$19.9 billion as of Sept. 24.
"It's a new record in foreign investment, one which may even exceed $22 billion by the end of this year as the licenses of two large projects are still pending our approval," Sanyoto told newsmen after meeting with President Soeharto at the Merdeka Palace here.
According to BKPM, the previous foreign investment record was set in 1992, when the board approved foreign investment projects worth $10.3 billion. Last year, foreign investment commitments declined to $8.1 billion.
Sanyoto explained that out of this year's foreign investments of $19.9 billion, $7.5 billion will be used to finance the establishment of seven large projects, consisting of four oil refineries, two power plants and one steel mill.
The two projects, whose licenses are still being processed, are part of the seven large projects.
BKPM's approval on the four private oil refineries in Aceh, East Java and South Sulawesi has drawn protests from a number of legislators in the House of Representatives (DPR), including Budi Harjono of the Indonesia Democratic Party, Iskandar Mandji and Tadjudin Noer Said of the ruling Golkar faction.
They claim that the approval of the four planned refineries violates Law No. 44/1960 and Law No. 8/1971, which require any investor in the oil industry to cooperate with the state-owned oil company Pertamina.
Export
Sanyoto argued yesterday that the approval of the four planned refineries does not violate existing regulations because 100 percent of their raw materials will be imported from the Middle East. Three of the planned refineries will export all of their products, while the other one will export only 65 percent of its products.
"Because the latter refinery will sell its products domestically, it will surely have to cooperate with Pertamina or sell its products to Pertamina, which will then resell them to the public," Sanyoto contended.
Of the four refineries, two will be constructed in East Java by PT Buana Ganda Perkasa with an investment of $3.5 billion and PT Asia Pacific Petroleum with $1.1 billion. The other two will be built in Sabang, Aceh, by PT Sabang Oil Refinery with an investment of $1.6 billion and in Pare-Pare, South Sulawesi, by PT Indo Mudi Oil with $1.03 billion.
Past records show that only 51 percent of foreign investment commitments were realized. As a result, Sanyoto said President Soeharto had asked him to summon the license holders from the four planned refineries once every three months to report the development of their projects.
"Investors actually have three years to implement their investment commitments but if they do nothing within six months, we will revoke their licenses," Sanyoto warned.
The Ministry of Mines and Energy will also monitor the implementation of the refinery projects every six months, he said.
The minister said he also reported to President Soeharto that over 65 percent of foreign investment projects approved this year will be located in Java.
Sanyoto said he therefore proposed that the government give more incentives to investors who are willing to set up projects in the eastern provinces of the country.
The proposed incentives could be in the form of tax holidays, lower interest and longer grace periods on banking credits, the reduction of private spending on infrastructure development and fringe benefits to taxable incomes.
Sanyoto said that as of Sept.24 this year his office also approved 637 domestic investment projects worth Rp 44.71 trillion ($20.5 billion), as compared to 548 projects worth Rp 39.5 trillion approved last year.(rid)