Facilitating investment, who is responsible?<\/p>\n
Riyadi Suparno, The Jakarta Post\/Jakarta<\/p>\n
Many people had all but forgotten about the Investment
\nCoordinating Board (BKPM), which used to play a major role in
\nattracting and facilitating foreign investment in the country.<\/p>\n
It was only the recent fiasco at the Jakarta International
\nSchool (JIS), where the then chairman of the board reportedly
\nassaulted a number of expatriates during a children's basketball
\ngame, that reminded us about this institution.<\/p>\n
The incident is truly lamentable. An ongoing police
\ninvestigation could lead to assault charges against the former
\nBKPM chairman, Theo F. Toemion, whose supporters demonstrated in
\nfront of the U.S. Embassy in Jakarta on Friday.<\/p>\n
Yet, the incident may also have the positive result of
\npromoting the government to take action. How could a man whose
\njob was to attract foreign investors allegedly attack foreigners?
\nFollowing the incident, the government quickly appointed a new
\nBKPM chairman, businessman Muhammad Luthfi.<\/p>\n
The government has claimed the replacement of Theo was in the
\nworks for at least three months because of his poor performance.
\nBut the timing of the replacement following the incident at JIS
\nis not a coincidence.<\/p>\n
Looking back at Theo and the BKPM, Theo was the only
\n\"outsider\" in President Susilo Bambang Yudhoyono's circle of
\naides. Thus, it was well understood that it was only a matter of
\ntime before Theo was shown the exit.<\/p>\n
The BKPM itself never had any prominence in the eyes of
\nSusilo. But Susilo alone cannot be blamed -- if he is to be
\nblamed at all -- for the declining role of the board.<\/p>\n
In fact, the BKPM never really appealed to any president after
\nB.J. Habibie, who included the BKPM chairman in his Cabinet as a
\nstate minister for investment -- just as his mentor Soeharto did.<\/p>\n
Since Habibie, BKPM's star has been dimming. Many people are
\nresponsible for this, including the BKPM itself which was unable
\nto sell its importance.<\/p>\n
The BKPM can surely blame the economic crisis for its
\ndeclining importance. The flow of foreign direct investment
\nsuddenly became negative after the crisis -- meaning the country
\nhad more investment outflow than inflow. The BKPM suddenly had
\nless, if anything at all, to do.<\/p>\n
Now, with foreign investment beginning to trickle in, the
\ngovernment plans to strip away some of BKPM's authority. First,
\nPresident Susilo will place the BKPM under the Ministry of Trade,
\nwith its chairman still reporting directly to the president.<\/p>\n
However, the government would be wise to rethink this plan,
\nwhich is illogical. How can someone placed under a minister
\nreport directly to the president?<\/p>\n
The BKPM, which was established in 1973, is a coordinating
\nbody, meant to coordinate ministries to help both foreign and
\ndomestic investors realize their investment plans. How can a
\ncoordinating body be placed under a ministry?<\/p>\n
In addition, the government plans to strip the board of its
\nlicensing authority. The government -- through Minister of Trade
\nMari E. Pangestu -- has said this means investors wanting to do
\nbusiness in Indonesia will not have to go through the BKPM.
\nInstead, they will have to go to a nearby public notary, which
\nwill then process the necessary licensing requirements at the
\nrelevant ministries.<\/p>\n
This plan also has serious problems. Who can guarantee that
\nthe relevant ministries will not charge exorbitant fees or
\nprolong the time for processing licenses? Unless there is a
\nstatutory guarantee that all government offices will issue
\nnecessary permits within a set time frame, it will create more
\nred tape and become more costly for investors.<\/p>\n
If the government goes ahead with its plan to remove the
\nBKPM's licensing authority, there is no point keeping the agency
\nas it is. The government should define the agency's new role and
\nthen change its name accordingly -- or abolish it altogether.<\/p>\n
But what about the Regional Investment Coordinating Boards, or
\nBKPMD, which used to be the local offices of the BKPM? Should
\nthey be retained or abolished? What if local governments still
\nneed them to promote investment in their areas and help investors
\ninterested in bringing money to the areas? All these things need
\nto be addressed properly.<\/p>\n
The alternative is to empower the BKPM and BKPMDs to fulfill
\ntheir functions as coordinating bodies providing one-stop service
\nfor investors. To give it more meaning, the strengthening of the
\nBKPM and the BKPMDs should be pursued through legislation in the
\nHouse of Representatives.<\/p>\n
If that is the way forward, the government should set a tough
\ntarget for the BKPM to meet, for example, giving it a time frame
\nfor investment licensing from an average of over 150 days now to
\na maximum of 30 days. All the targets should also be put in the
\nlegislation -- the investment bill that the government has said
\nis ready to be submitted to the House.<\/p>\n
If the government -- and the House -- agrees to empower the
\nBKPM, it should then take a serious look at the issues of
\nmanpower and budgets. It should consider restocking the board
\nwith people passionate about marketing and, at the same time,
\nprovide them with the budget to promote the country, attract more
\ninvestment and take care of existing investors.<\/p>",
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"sponsor": "Okusi Associates",
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