ABSTRACT
One of the most serious criticisms of foreign investment that has emerged is the potential danger of having large parts of important sectors dominated by capital from one or two foreign countries. Because foreign investment in extractive industries invariably determines destination of those exports, foreign investment monopoly in a sector is tantamount to monopsony in Indonesian exports; that is, the foreign investor becomes the sole buyer of Indonesian exports in that sector. Foreign investment approvals in 1974 were little more than one-third of the value in 1973, but this might have been partly due to increasing domestic investors' interest in the sector. While forestry and mining saw original developments in many areas, the manufacturing sector that existed in 1965 was directly threatened by foreign investment because the tight money policy of the late sixties held back its rehabilitation for several years after the 1967 Foreign Investment Law came into effect.
