Indonesia plans to introduce a slew of changes to address problems in its infrastructure, logistics, electricity and labour sectors in order to attract more investment and create jobs, said Trade Minister Mari Pangestu.
One such measure would be to develop the existing free zones in Bintan, Batam and Karimum and establish new special economic zones throughout the country. These zones would be helpful in helping attract investment into the country as they would enable Indonesia to provide more efficient services in a few locations initially rather than across the entire country as a whole.
Ms Pangestu added that addressing logistics problems, such as roads and transport, would help to attract manufacturers, such as those in the electronic and automotive sectors, as well as in the textiles and garment industries.
She also revealed that the government would continue with its reforms, for example of the civil service, although she admitted that the speed of the reforms was not as fast as expected. However, she believed that the speed of the reforms would pick up speed soon.
President Susilo Bambang Yudhoyono, who won a second five-year term in July this year, is targeting at least a 7 per cent Gross Domestic Product growth by 2014, up from the forecasted 4.3 per cent this year.
However, investors frequently cite corruption, legal uncertainty, red tape, poor infrastructure, and tough labour laws as deterrents and say that these factors would hold back growth in Southeast Asia’s biggest economy.
Ms Pangestu also said that the Indonesian government would be investing on providing better infrastructure, especially in ensuring that electricity supplies improve. Frequent blackouts have disrupted manufacturing and have been a major source of complaint among some of the Japanese companies with production facilities in Indonesia.
Date: 03 November 2009
Written by: Mohamed Hairul Borhan