BKPM seeks to centralize investment licensing<\/p>\n
Attracting foreign investors to kick start an ailing economy
\nis utmost and foremost in the mind of our government officials
\nthese days, and the burden lies with the Investment Coordinating
\nBoard (BKPM). The regional autonomy law, however, giving more
\nauthority to regional administrations, seems to be at odds with
\nthe board's intention to become an umbrella body for investors.
\nThe Jakarta Post's Tantri Yuliandini and Johannes Simbolon
\ninterviewed BKPN chairman Theo F. Toemion.<\/p>\n
Question: We are interested in hearing your views on the
\nfunctions of BKPM, especially in light of the regional autonomy
\nlaw.<\/p>\n
Answer: BKPM is at a crossroads right now. As you know, as a
\nconsequence of the regional autonomy law, regional
\nadministrations can now issue licenses (related to investment
\npurposes). We now realize that we need to revoke this authority.<\/p>\n
At the moment, we all know that the regional autonomy law is
\nbeing revised and I have written a letter to the Minister of Home
\nAffairs for those rights to be centralized again.<\/p>\n
The reason is clear: we want those rights to be centralized to
\nensure a balance between the industrial sectors and between
\nregions. This is needed for a mapping of our investment so we
\nknow which areas still need encouraging and extra incentives.<\/p>\n
If we look at incentives, whether fiscal or non-fiscal, such
\nas lower import tariffs and tax holidays, they are still far from
\nbeing decentralized.<\/p>\n
So, I believe the time is not yet right for our national
\ninvestment policy to be transferred to regional administrations.<\/p>\n
Q: Does this mean the regional investment boards will be
\ndisbanded, or will they function as the extended arm of the
\ncentral BKPM?<\/p>\n
A: We used to have regional offices, called the BKPMD, which
\nsince the imposition of the regional autonomy law have become
\ninvestment services offices, reporting directly to the governor.<\/p>\n
We hope that with the revised autonomy law, the offices'
\nfunctions will be redirected back to the central government so
\nthe regional offices have to coordinate with the central office
\nto issue licenses.<\/p>\n
What we need to remember is that the country badly needs
\ninvestment. With the state of the country's economy, our banking
\nindustry not yet fully functional and a swamped private sector,
\nthere is no other option than to attract investment. For that,
\nsacrifices have to be made.<\/p>\n
We must prevent situations from developing, as they have now,
\nwhere the regional administrations issue regulations to earn
\nmoney that inhibit the growth of investment that they need.<\/p>\n
Q: How do you coordinate licensing procedures with the different
\nregions when each region may have a different set of regulations?<\/p>\n
A: That's just the point. There shouldn't be any difference. As I
\nsaid, the country badly needs new investment. So each region
\nshould have the same perceptions.<\/p>\n
The policy will be at the level of the central government. The
\nregional administrations must understand this and they must
\nsupport it because, in the end, it is the regions that benefit.<\/p>\n
In the meantime, the regions could suggest to the central
\ngovernment how to best attract investors because they know their
\nown area. We give incentives for regions that need them. I am
\nsure the regions will be grateful in the end.<\/p>\n
Q: What steps have you taken to reclaim the rights of BKPM in
\nissuing licenses for investment?<\/p>\n
A: We have written to the Minister of Home Affairs and in the
\npreliminary meeting I think it has been agreed that the rights
\nshould be reclaimed from the regional administrations.<\/p>\n
In time, the proposal will go to the House of Representatives.
\nWe have discussed this with the House's Commission V for industry
\nand trade affairs and they are very supportive of our efforts
\nhere at BKPM.<\/p>\n
The commission has also agreed to support the proposal when
\nrevisions to the regional autonomy law reach the House for
\ndeliberation.<\/p>\n
Q: Have you calculated the resistance that this proposal will
\ncreate?<\/p>\n
A: People are likely to be reluctant (to give us back these
\nrights). BKPM's function is not limited to issuing licenses
\nthough, it covers promotion also. In this case, the regional
\nadministrations are the ones who know their own areas best, their
\nstrengths and the wealth of natural resources. They are free to
\npromote their area for investment.<\/p>\n
From the letters I receive from regional administrations,
\nbasically all they want is clarification. I think they also
\nrealize that we are not blocking investors from entering their
\nregions.<\/p>\n
As I've said, to be able to achieve balanced and significant
\ngrowth between regions, we need to know which areas need more
\nincentives and, in terms of incentives, these are still in the
\nhands of the government.<\/p>\n
Q: Will this right be permanent or phased out to gradually give
\nmore authority to regions?<\/p>\n
A: Later on, regions will be rated based on how attractive they
\nare for investment. There will be an assessment body to rate them
\nand, so, each administration should compete to make its region
\nthe most attractive for investment. When they reach a certain
\nstage they will be given more authority over investment. So, if
\nthey want more authority, they should also ensure that the
\nclimate is conducive for investment in their areas.<\/p>\n
In time, the central government will only provide easy
\nlicensing procedures and, if the investor wants to go to the
\nregion, the regional administration will help them.<\/p>\n
Q: How will BKPM do its job when many regulations involved with
\ninvestment are not under BKPM's authority?<\/p>\n
A: As you know, BKPM has been without a chairman for a long time
\nand people think BKPM is redundant, which is understandable,
\nbecause more focus was on the state-owned enterprises. And even
\nmuch of our authority has been stripped away by technical
\nministries, such as licenses for workforce, tax incentives,
\netcetera.<\/p>\n
I believe that by putting me in charge of this office, the
\ngovernment is committed to reinstating the functions of BKPM.
\nThat's why I have been busy restoring the internal structure of
\nthe office, workers who have long been demoralized without a
\nleader, reclaiming our initial functions, including drafting a
\nnew law on investment and consolidating our function as an
\ninvestment coordinating body.<\/p>\n
It's difficult if BKPM issues a license and it is then
\noverruled by regulations from other ministries. We hope that with
\nthe new law all of this will be clarified and our position and
\nfunctions ensured. BKPM will overrule other ministries'
\nregulations and bureaucracy to ensure easy and fast procedures
\nfor investors. That's why a strong leader is needed. It helps
\nthat I have experience as a member of the House.<\/p>",
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"sponsor": "Okusi Associates",
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