Sat, 01 Apr 2006
Malaysian business wants certainty in RI investments

Rendi Akhmad Witular, The Jakarta Post, Kuala Lumpur

While interest is high in investing in Indonesian turnpike and plantation projects, Malaysian businesspeople are held back by concerns about uncertainty surrounding their enterprises.

Uncertainty in land acquisition, unfavorable labor legislation and unrest among local communities where businesses are located were among the concerns they conveyed Thursday to Vice President Jusuf Kalla in Kuala Lumpur.

"Malaysian investors are actually very interested to participate in Indonesian turnpike projects. However, problems related to land clearance have discouraged us from realizing this," said Mohammad Ramli Kushairi, an executive from the Malaysian-Indonesian Business Council.

Numerous infrastructure projects in the country have stalled due to problems related to land acquisition, with investors facing widespread demands from landowners -- often in collusion with state officials -- for exorbitant prices.

Other problems discussed during the meeting included the lack of local financing and uncertainty in the annual increase of turnpike rates.

In response to the land acquisition problem, Kalla said the government had appointed state-owned turnpike operator PT Jasa Marga to help secure land for the planned projects before they were proposed to investors.

"Investors should no longer worry over the land acquisition problem. Investors will only have to invest and construct the turnpike," Kalla told the businesspeople.

The government is currently accelerating the construction of 1,000 kilometers of turnpikes, which should be completed by 2009 to help achieve an average economic growth target of above 6 percent in the next five years.

Indonesia's woefully deficient highway infrastructure contributes significantly to distribution bottlenecks which in turn create high costs in the economy.

During the meeting, the businesspeople also told of problems they encountered in the plantation sector, including extortion of money from plantation investors by local communities, which often led to a halt in operation.

"The local community needs to cooperate with investors. Most of them often disturb our operations in exchange for some amount of money," said Abdul Wahab Maskan, chief executive officer for Malaysian plantation giant Guthrie Group.

Maskan also emphasized the need for the Indonesian government to extend plantation concessions to encourage more Malaysian investors.

"We expect concessions for plantations could reach 60 years with an opportunity to extend them," he said, adding that Malaysian investors had invested about US$1 billion in the plantation sector in Indonesia.

At present, the government only allows a 30-year concession, although it is extendible for another 25 years.



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