Investment approval drop temporary, says Jakarta

INDONESIA’S Investment Minister Sanyoto Sastrowardoyo has assured businessmen here that the sharp drop in foreign investment approvals this year was only a temporary set back and that the government was on course towards achieving its economic targets.

He said the recent slump was of little concern as it occured every five years during the general election, news reports yesterday quoted him as saying.

“This is a five-year cycle for us,” he said. “It happens everywhere else in the world at election time. Businesses wait to see who will win and what will happen.”

The three-week election campaign, which saw a spate of riots across the country, caused foreign investment approvals in the first five months of this year to fall 36 per cent in volume and 25.5 per cent in value compared with the same period last year.

A total of 302 foreign investment commitments worth US$13.7 billion (S$19.2 billion) were approved, down from 473 projects worth US$18.73 billion a year earlier. The figures he cited did not cover investments licensed in the financial, service, oil and gas sectors.

Mr Sanyoto, who is also the chairman of the Investment Coordinating Board said the drop was less than the 40 per cent decline around the time of the last polls in 1992. He added that the current situation would recover in the next few months as had happened five years ago.

Indeed, his optimism was shared by the growing confidence of foreign investors in the stock market. According to The Indonesian Observer, in the period preceding polling day on May 29, foreign investors sold more shares than they bought. But after the election, they bought more shares than they sold.

Mr Sanyoto also noted that the recent drop was insignificant compared to the growth in foreign investment approvals over the last five years.

During the last Five-Year Development Plan from 1989 to 1994, such approvals totalled US$44 billion. But now, in the fourth year of the current 1994-1999 plan, he said the government had already licensed US$108 billion in new foreign investment commitments.

“This means that even if until the end of this year we have no additional foreign investment approvals, what we have achieved in this Five-Year Development Plan is already twice as much as in the last,” he told The Jakarta Post.

“There is nothing to worry about.”

He said his ministry aimed to approve more than 44 trillion rupiah (S$26.4 billion) in foreign and domestic investments a year, or 244 trillion rupiah in five years, during the current development plan.

Businessmen told The Straits Times that the country was attracting foreign investments, particularly in farming, fishing and agricultural industries.

Said Mr Winarto, the president-director of the Indonesia Growth Fund, an international venture capital: “Despite the occasional political hiccups in Indonesia, many foreign firms are still coming into the country in a big way because it is one of the best performing economies in Asia.

“Businessmen go where the money is.”

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