Value of foreign investment deals up 13 percent
Value of foreign investment deals up 13 percent
JAKARTA (JP): The value of foreign investment approvals rose
by 13 percent to US$33.8 billion this year, State Minister of
Investment Sanyoto Sastrowardoyo said yesterday.
Sanyoto said the number of projects approved for foreign
investors this year, however, declined by 11.4 percent to 790
projects.
The value of domestic investment approvals also increased this
year by 19.1 percent to Rp 119.9 trillion. There were 718
projects approved, down from 810 projects in 1996, he said.
Last year, the value of foreign investment approvals fell by
about 25 percent while the value of domestic investment approvals
increased by 44 percent.
Sanyoto, who is also chairman of the Investment Coordinating
Board, said most of this year's foreign investment approvals came
from Britain, which had committed to 31 projects totaling $5.5
billion.
"Britain took over Japan's place last year as the largest
foreign investor in Indonesia this year," he said.
Britain is followed by Japan, which invested in 94 projects
worth $5.4 billion. Direct investment from Germany totaled $3.5
billion, Taiwan $3.4 billion and Malaysia $2.3 billion.
Sanyoto said chemical industries remained the most attractive
sector to foreign investors this year, with approvals in the
sector totaling 93 projects worth $12.3 billion.
Transportation followed with 36 project approvals totaling
$5.9 billion.
Investors also focused on pulp and paper projects worth $5.3
billion, metal industries $2.3 billion, and electricity, gas and
drinking water $1.8 billion.
Sanyoto said local investors were also attracted to chemical
industries this year. They had committed to 68 projects totaling
Rp 22.4 trillion, he said.
Agribusiness totaled Rp 13.3 trillion, the food industry Rp 13
trillion, and paper and nonmetal minerals Rp 11.6 trillion.
Foreign investment approvals for export-oriented projects grew
17.3 percent to $11.5 billion, with the number of projects
declining to 402 from 520 projects in 1996.
Local investment approvals for export-oriented industries grew
35.8 percent to $20.1 billion, with the number of projects
falling 10.7 percent to 242.
Sanyoto said his office had estimated that about 53.44 percent
of foreign investment approved in 1994 had been realized this
year, totaling $27.3 billion.
He estimated 47.96 percent of local investment approved in
1994 had also been realized this year, amounting to Rp 53.3
trillion.
"Assuming that investment commitments are realized within
three years, the value of realized local and foreign investment
this year totaled about Rp 62 trillion," he said.
The amount was based on the value of the U.S. dollar in June
when it was Rp 2,500. The dollar's value has risen to about Rp
5,000 since then.
Cancellation
Sanyoto said 143 projects which had already been approved were
canceled this year.
This was made up of foreign investment worth $1.7 billion and
local investment worth Rp 3.9 trillion, he said.
Nine projects canceled by foreign investors were in textiles
worth $647.5 million, nine in hotel projects worth $521.7 million
and a mining project worth $335.1 million, he said.
Local investors canceled 13 chemical projects worth Rp 2.3
trillion, eight agribusiness projects worth Rp 521.7 billion, and
eight hotel projects worth Rp 414.5 billion.
He said cancellations were mostly due to financial
difficulties, poor networking and marketing access, inadequate
technology application and insufficient infrastructure.
Overall, the ministry predicted that foreign and local
investment approved this year would absorb about 1.69 million
people into the labor force, a 17 percent drop from last year.
Sanyoto said he was optimistic that direct foreign investment
would remain bright next year.
"I am confident the monetary crisis will gradually come to an
end because of our sound economic fundamentals," he said.
The confidence in Indonesia's economic potential by foreign
investors from the United States, Japan, and Britain would remain
positive, he said.
The government would also continue to improve the investment
climate in the country, he said.
This included the recent measure to grant a two-year extension
to local and foreign investors facing difficulties in starting
projects on time.
Investors who are granted permits to set up projects are
normally required to start projects within three years.
Sanyoto said no investors had asked for the two-year extension
yet.
He said the government would also provide tax holidays to
investors for six to 10 years if they were involved in certain
business sectors.
The minister said at least six projects had been proposed to
the President to receive the tax incentives. (das)
Table A: Foreign and domestic investment
1993 1994 1995 1996 1997
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Domestic investment:
Number of projects 548 823 775 810 718
Investment value (Rp trillion) 39.4 53.3 69.9 100.7 119.9
Foreign Investment:
Number of projects 330 451 799 959 790
Investment value (US$ billion) 8.1 27.3 39.9 29.9 33.8
Table B: Top foreign investors
1997 Cumulative 1967/1968 - 1997
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No. Country Projects Investment Country Projects Investment
(US$ billion) (US$ billion)
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1. Britain 31 5.5 Japan 1004 41.4
2. Japan 94 5.4 Britain 236 32.3
3. Germany 15 4.5 Hong Kong 368 18.7
4. Taiwan 101 3.4 Singapore 706 18.5
5. Malaysia 59 2.3 United States 289 14.5
Source: BKPM