Crude price hikes affect investment in RI, BKPM says

Jakarta, April 22, 2008 – The crude price hike which happened to reach US$117 per barrel is expected to discourage investors to realize their investments in Indonesia, investment agency chief said. ANTARA News reported (PubDate: 04/22/08).

“Investors will recalculate their investments if prices are now surging,” Capital Investment Coordinating Board (BKPM) Chairman M. Lutfi said here on Monday.

He said that investors who had obtained investment approvals were forced to delay the realization of their projects because they had to recalculate their investment in the first place.

“Let`s take an example. An investment of a 2.5 million ton capacity steel factory would need US$2 billion of fund three years ago. I estimate today that a fund of US$4 billion would no longer be enough because raw material prices and costs are all increasing,” Lutfi said.

Lutfi said that the oil price hikes affected investment not only in Indonesia but also in other countries in the world.

But now, he said, no investor has proposed an extension in the realization of his or her investment approval.

“Investors are given 24 months after they were awarded the approvals to realize their investment. If they fail within the given period we would grant them an extension but up to now none of them has applied for an extension. But I think there must be investors who are recalculating their investment,” he said.

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