Experts urge govt to fix investment climate<\/p>\n
Evi Mariani, The Jakarta Post, Jakarta<\/p>\n
The government must boost efforts to act against corruption and
\ncreate a reliable labor force if it wanted to lure automotive
\ninvestors back into the country, according to automotive and
\ninvestment experts.<\/p>\n
\"There are a number of negative factors (in Indonesia) which
\nconcern potential investors particularly in areas of long-term
\nsocial and economic stability, official corruption and the
\nefficiency and transparency of the court system,\" Al Warner of
\nthe U.S. Department of Commerce said in an automotive seminar on
\nWednesday.<\/p>\n
Liam Benham, a director of Ford Motor Company's Southeast Asia
\noperation, also emphasized similar problems, saying that the weak
\nlegal system and deeply rooted corruption were risk factors for
\npotential investors.<\/p>\n
Although Indonesia is a large population, with cheap labor,
\nand abundant natural resources, global automakers have largely
\ndeclined to set up their production bases for the regional market
\nin this country due to poor investor confidence, including a lack
\nof a supporting industry for a strong automotive sector.<\/p>\n
The introduction of the ASEAN Free Trade Area (AFTA), which
\nhas significantly cut down import tariffs on various products,
\nmeans the Southeast Asian region has become a vast market to sell
\ncars. To take advantage of this potential, most of the large
\nforeign car makers have set up production bases, mainly in
\nThailand. It is currently the home of the largest auto industry
\nin Southeast Asia.<\/p>\n
In recent years, Thailand has become a manufacturing hub,
\nproducing about 14 vehicles from Ford, Toyota, Mitsubishi, Volvo,
\nMazda, Honda, Nissan, Isuzu, Chevrolet and BMW.<\/p>\n
Meanwhile, Indonesia only produces the Toyota Kijang vans, and
\nthe Honda Stream van.<\/p>\n
The experts reiterated that in order for Indonesia to be able
\nto attract new investment from global car makers, the country
\nmust immediately begin to fix its various problems, most of which
\nrevolved around corruption in one form or another.<\/p>\n
President of Japanese External Trade Organization (Jetro)
\nHiroyuki Kato said in the same seminar that Japanese automakers
\nwere trying to rebuild their system in both the completely built
\nup car business and in the auto-parts business.<\/p>\n
\"In the auto-parts business, they have planned to strengthen
\ntheir existing plants in Indonesia as the production site for
\ngasoline engines and Thailand for diesel engines,\" he said.<\/p>\n
However, he warned that Indonesia had been losing its
\nadvantages -- cheap labor and abundant energy resources -- in
\nattracting foreign direct investment (FDI).<\/p>\n
\"Those things used to be Indonesia's traditional advantages.
\nThey are now gone,\" he said. \"Now, this country has to find brand
\nnew advantages.\"<\/p>\n
Such advantages could, he explained, include better
\ntransportation facilities and a more reliable labor force to
\nensure steady production.<\/p>\n
\"If the production process is in trouble in the country, it
\nwill affect the supply network throughout the whole region,\" he
\nsaid.<\/p>\n
Indonesia, which relies heavily on its large population as a
\npotential market, has been enduring a large increase in
\ncomplaints from foreign investors. They have warned Indonesia
\nthat its attraction was waning and that was why foreign investors
\nwere leaving in droves to other countries like China and emerging
\nVietnam.<\/p>\n
In the seminar, Indonesia's Ministry of Trade and Industry's
\ndirector for land transportation M. Setiono said that the
\ngovernment had been focused on the local auto-parts industry as a
\nstep to strengthen the overall car industry.<\/p>",
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"sponsor": "Okusi Associates",
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