The Indonesian Industrial Estate Association, or HKII, on Tuesday urged the government to implement its industrial estate regulation, known as RPP KI, to better protect businesses and attract foreign investors.
The RPP KI was drafted in 2006 to help streamline the foreign investment process in Indonesia by providing firms with a one-stop-shop for regulatory approval. It was also hoped that the bill would stem the flow of illegal “fees” and other payments from foreign firms to corrupt officials.
“If the law were enacted, business players and investors would no longer have to deal with the complicated administrative procedures currently required to do business in this country,” Hendra Lesmana, HKII’s chairman, said on Tuesday.
According to Hendra, many foreign investors have complained about the administrative hurdles they have to jump when investing or developing a business in Indonesia.
“These investors are holding off on working here until there is a legal structure that can help them avoid troublesome documentation requirements,” Hendra said.
By approving the RPP KI, Hendra continued, the government would help the country’s industrial sector meet growth targets and possibly achieve 10 percent growth in 2009.
“There are more than 20 foreign investors who are ready to invest in manufacturing after the government issues the regulation,” HKII’s chairman said.
Hendra estimates that the investment value from those foreign firms - most of which are Japanese - could exceed $100 million.
“Each investor would be able to invest between $1 million and $3 million for small-scale industry and around $5 million to $10 million for large-scale industry,” he said, adding that most of the firms are automotive companies like Bajaj Auto Ltd., TVS Motor Co., Yamaha Corp. and General Motors Corp.
Last week, the Ministry of Industry said that the value of Indonesian exports, excluding oil and natural gas, amounted to $51 billion, a 10 percent increase over last year. Seventy percent of the amount was derived from industrial sector activity.
Currently industrial areas occupy around 32,460 hectares of land in 13 cities around the country, employing more than one million workers.
Hendiyanto, HKII’s secretary general, suggested that approval of the RPP KI could have a large impact given how crucial industry is to the Indonesian economy, saying: “If the government issues the regulation quickly, I believe that the rumors of increased poverty next year will be proved wrong and the climate for investment will improve.”
The House of Representatives passed the RPP KI two years ago. Hendra noted that while it was scheduled to be enacted at the end of 2006, the government has yet to follow through on that target.
Hendra said that President Susilo Bambang Yudhoyono had promised in June that the regulation would be issued within two months. But, he said, “there has been no progress since the president made that promise to us,” adding that a source had informed him that the regulation was at the state secretariat awaiting the president’s signature.