Jun 16, 2015
Investment Climate Statement of Indonesia
A.1. Openness to Foreign Investment
Indonesia encourages private sector-led growth and foreign investment. It maintained a relatively open foreign investment regime and President Megawati declared 2003 as the "Year
of Investment." Official appeals for investment have not been matched by action on serious issues facing investors such as judicial reform and rampant
Investors reduced investment in the last few years; balance of payment statistics continue to reveal net negative investment flows. Foreign investment approvals in 2002 declined to USD 9.8
billion, from USD 15 billion and USD 16 billion for 2001 and 2000, respectively. Indonesia tracks only investment approvals, which, if they happen at all, may require years to realize. Investment approvals for Indonesian firms trended even more steeply downward amounting in 2002 to only USD 2.8 billion, from USD 5.8 billion and USD 11 billion in 2001 and 2000, respectively. Indonesia counts three categories for investment-new investment, expansions, and changes in status which inflates investment approval figures. Changes in status occur when a foreign investor purchases a domestic company--partially or wholly--in which case the entire equity of the Indonesian firm is added to the investment approval totals. Recent privatization sales greatly increased the amounts in the change in status category and resulted in inflated investment figures for 2002. c