The Investment Coordinating Board (BKPM) released investment figures for the month of January late last week revealing a steep fall in foreign direct investment (FDI) approvals but an upsurge in domestic investment.
FDI approvals in January totaled $321.8 million compared with $486 million the same month a year before, while the value of approved domestic investment projects rose last month to Rp1.03 trillion ($116 million) compared with Rp674 in January 2002.
For full-year 2002, FDI approvals dropped sharply to $9.74 billion involving 1,135 projects, compared to $15.06 billion for 1,333 projects in 2001, reported Antara.
In 2002, domestic investment project approvals dropped sharply to 181 projects worth Rp25.262 trillion, from 264 projects worth Rp58.816 trillion in 2001.
The BKPM said the approved FDI projects comprised 78 new projects worth $53.8 million, compared to 79 projects worth $366.2 million a year earlier, and 24 expansion projects worth $59.2 million against 27 projects the previous year.
It said a large amount of the FDI approvals in January – or $208.8 million comprising 12 projects – were for a change of status from domestic investment to FDI projects, against only seven projects worth $13.7 million in the previous year.
Of the approved domestic projects, 10 were new projects worth Rp440.7 billion, reflecting an increase from the year-earlier 16 projects worth Rp533.7 billion, reported AFX-ASIA.
Separately, the government approved 13 expansion projects, which involved investments totaling Rp563.7 billion, up sharply from six projects worth Rp139.2 billion a year earlier.
The BKPM report said the transportation, storage and communication sector attracted the most foreign investments, with $120.2 million worth of foreign investment approved, followed by other services with $40.1 million, reported Agence France Presse.
By sector, domestic investment approvals in electricity, gas and water supply reached Rp230.5 billion, followed by transportation, storage and communication with Rp148.5 billion; metal, machinery and electronic industry with Rp131.3 billion; and construction with Rp97.5 billion.
It said the approved FDI projects have the potential to absorb 21,357 local workers and 551 expatriates, while the domestic projects may absorb 5,008 local workers and 18 expatriates. Officials have blamed the constant drop in investment on labor problems, a corruption-prone court system and a lack of regulations governing local autonomy, resulting in frequent legal disputes involving investors and regional governments.
Wins and losses In support of claims that the FDI sector is looking increasingly gloomy, Cilegon Industrial Estate [KIEC] official Chosnul Saiin, said at least five foreign investors have cancelled their investment projects in Cilegon, Banten, because of legal uncertainties and rampant levies.
The foreign investors, including companies from France, India and Germany, planned to construct a chemical factory in the industrial estate, Saiin said as quoted by Antara.
While there was bad news, there was also some positive news on the investment front. Lloyd's List reported that a plan for a $200 million hub port in eastern Java would go ahead.
Bambang Darwoto, president of state-owned port operating company Pelindo III, said the new port would allow exporters to save time and money because it would allow shipments to be made direct rather than through Singapore.
The new port would be about 40 km from the existing container terminal at Tanjung Perak, Surabaya.
There was also good news in the components sector, with South Korean interests said to be considering investing in Indonesia to supply components for Korean electronics, automotive and petrochemical industries.
Ten mid-size component manufacturers from South Korea were studying the possibility of making Indonesia the center of component producers for Korean industries in Southeast Asia, The Jakarta Post reported.
The report said newjoint ventures would support existing Indonesian units of Korean corporations such as Samsung and LG.