Mon, 23 Apr 2007
From: The Jakarta Post
By Andi Haswidi, The Jakarta Post, Banda Aceh
Famous for their resilience, with only two years having passed since the tragic Aceh tsunami, the people of Aceh are already anxious to move forward and make Aceh the next destination for local and foreign investment.

So far, the province's economy has been chiefly supported by an inflow of foreign funds used to finance the reconstruction of infrastructure and housing facilities damaged by the deadly December 2004 tsunami.

The Aceh and Nias Rehabilitation and Reconstruction Agency (BRR) was established April 2005 as the authority responsible for managing the Rp 60-80 trillion in rehabilitation funding that is expected to be fully disbursed by April 2009.

Below is an excerpt from an interview with BRR's deputy chairman for economics and business, Said Faisal Baabud, on the agency's efforts to help revitalize the province.

Can you explain the role of the BRR in rehabilitating Aceh's economy?

The agency has five approaches on how it will shape the future of Aceh's economy. The first is the principal of a populous economy, where we directly engage with the people in rehabilitating the basic needs and jump-start their economic activities. This includes micro-financing activities.

The second approach is improving investment. The third is to help the region engage in regional and international trade. The fourth is to increase the value of our products, and the fifth is to strengthen local businesses.

The agency has established an economy and business unit with two main tasks. The first is to manage the rehabilitation of Aceh's post-tsunami economy, and the second is to prepare the basic foundations of the province's economy so it will not decline drastically after the rehabilitation period is over.

In 2005 and 2006, we focused on rehabilitating the people's basic infrastructure, such as by fixing ruined fish banks, reviving the activities of fishermen and rehabilitating rice fields.

And now, from 2007 onwards, we are trying to strengthen the province's economy through various investment programs and promotions, apart from continuing to build supporting infrastructure, such as ports for ships and fishery activities.

Because the second phase of our task is very critical, we are working with the International Finance Corporation (IFC), the Investment Coordinating Board (BKPMD) and also the Indonesian Chamber of Commerce and Industry (Kadin).

We have also recently established the Investor Outreach Office (IOO), which is expected to provide services to those who are planning or looking to invest in Aceh.

How about the budget for the rehabilitation project? From the state budget alone we get Rp 21 trillion. About 50 percent of this went into infrastructure projects. As from foreign donors, we are expecting to receive more than Rp 40 trillion.

We have rehabilitated about 75,000 hectares of rice fields and 150,000 fish banks, all of which are about 50 to 60 percent of the total figure.

Do you think it has been safe to invest in Aceh?

Rehabilitation after the tsunami has basically covered two things: infrastructure and non-infrastructure.

For non-infrastructure rehabilitation, efforts have focused on the image Aceh projects to the outside world. What's interesting is that perception is different from fact. Those who are unfamiliar with Aceh must have often heard that the region is unsafe, prone to conflict and badly damaged. These images are not good for luring investors.

But when they actually came to Aceh, they could see that things are not as bad as they thought, not at all.

To attract long-term investments, the need to deliver these facts to the world is crucial. We need to be more aggressive. These facts also include data about the region's potentials in natural resources such as minerals, agricultural products and plantations. That is why we need to establish the IOO.

So the message is really about Aceh, a region that was devastated by 32 years of conflict and has now turned into a lucrative land for investment.

Where does Aceh's biggest potential lie?

Its location is definitely Aceh's biggest potential. It is located in the path of international trade. You can access Malaysia, India, the Middle East and other regions through Aceh.

The new law on the Aceh government allows greater space for Aceh to interact with international markets. This is basically about shifting Aceh's ability to be able to catch the opportunities available in international markets.

Of course, there are stages to go through before we can get there. In the meantime, we will do our best within the current context.

Another promising potential in Aceh is the energy sector. We have a lot of geothermal sources here. Collectively, they can amount to 533 megawatts.

Our resources also encompass coal and other products of mineral mining. But if we talk about the current situation, then agriculture and fisheries are still our main focus.

How about human resources in the region? Are they ready for it?

We are now in a transitional period. The character of Acehnese people embodies vigilance. Many ask, how can we survive such a tremendous disaster? The minute we talk about entrepreneurship, this kind of character is the core element for an entrepreneur.

As for the province's dependency, I think the mechanism of the market has a role to play here. What Aceh needs to do is gain the ability to increase the value of its products and not rely on other regions.

Added product value is important. To create an increased value to a product it will take a lot of workers, which is good for the region itself. This is exactly what we are trying to do.

We will strengthen the processing sector, so that whenever products reach the market, their value can be felt here.

Moreover, there are many Acehnese who are accustomed to international standards. We often interact with foreign donors and this habit has changed the psychological framework of how we deal with human resources.

Why are living expenses in Aceh, Banda Aceh for example, now higher than in other cities in Indonesia. ?

It is normal for a region that is recovering from war or disaster to receive a lot of donations, which creates high inflation in the initial stages. Many refer to this as the dollar effect.

When funds entered Aceh, infrastructure was already damaged, hampering the inflow of goods. When demand is high and supplies are slow in coming, then prices will increase. That is normal.

Nowadays, with the rebuilding of infrastructure, things are slowly getting back to normal again.



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