JAKARTA -- Foreign investment in Indonesia has been locked in a downward spiral. Despite optimism at the appointment of the current government, the country has barely been able to attract capital from outside. The terror attack against the United Stated on Sept. 11 only partly explains the negative sentiment.
Foreign direct investments (FDI) over the first 10 months of this year have dropped roughly 50 percent compared to the same period in 2000. In total, there have been $6.5 billion worth of FDI approvals. This stands in stark contrast to the $434 billion Indonesia was able to attract in 1997 before the Asian currency crisis struck.
Businessmen from abroad usually have a whole list of complaints about Indonesia. The foremost reasons for avoiding or even leaving the country are rampant corruption, the collapse of the judiciary system and a lack of security, says Mark Baird, country manager of the World Bank in Jakarta. The terrorist attack against the United States, the war in Afghanistan and the mixed reactions in Indonesia have only exacerbated the problem.