~Foreign investors awaiting more stable environment<\/p>\n
By Eun-ho Seung,
\nChairman of Korean Chamber of Commerce in Indonesia<\/p>\n
Fundamentally, the country remains an attractive place
\nfor investments thanks to its abundant natural resources, huge
\npotential market and large pool of labor.
\nBut it will likely take a few more years more before new foreign
\ninvestors will return to Indonesia, due to a combination of
\ndomestic problems, weak economies in the Association of Southeast
\nAsian Nations (ASEAN) region and uncertainty about the global
\neconomic condition.
\nMost foreign investors now prefer to wait and see due to
\nweak law enforcement, overly rigid labor regulations and other
\nproblems inherent to the current transition to a more democratic
\nand decentralized system of government, as well as the simmering
\npolitical climate in the run up to the 2004 general election.
\nHowever, if the new government that takes office in late
\n2004 is able to improve the general climate for business and
\nstrengthen political and social stability, foreign investors may
\nreturn sooner than expected.
\nIndonesia is now less attractive to new investors than
\nChina and Vietnam and it needs to learn from these countries
\nabout how they designed their economic policies, legal framework
\nand labor and taxation regulations to woo investment.
\nMany have complained about the uncertainty caused by the
\ndecentralization of power to the regions, although
\ndecentralization is a rational choice for this vast archipelagic
\ncountry.
\nWhat matters to investors is that this process should not cause
\nnew problems, such as unclear division of authority between the
\ncentral government and local administrations, policy
\ninconsistencies, arduous licensing procedures and double tax
\nburdens. Such problems not only increase the costs of doing
\nbusiness but, most damagingly, fuel the uncertainty that is the
\nnumber one enemy to investors.
\nSuffocating labor regulations and the tendency for militant trade
\nunions are especially inimical to Korean business operations in
\nIndonesia because most Korean investors operate in labor-
\nintensive industries. They depend on peaceful industrial
\nrelations and a consistent wage policy.
\nThere are now 570 Korean companies operating in Indonesia with
\ntotal investment of US$9.5 billion. They manufacture a wide range
\nof industrial products such as shoes, textile and garments, bags
\nand stuffed toys and various other light industrial goods.
\nThey employ around 500,000 workers, with annual exports of about
\n$4.5 billion of various manufactured products. Korean investment
\noperations have also contributed greatly to expanding bilateral
\ntrade to more than US$7.8 billion annually.
\nThe ASEAN Free Trade Area theoretically makes Indonesia, by far
\nthe largest member of the regional grouping, much more attractive
\nto investors as they can use the country as a beachhead to export
\nto other ASEAN countries under the preferential tariff
\narrangements.
\nBefore that happens, however, investors need more stable
\npolitical, economic and social conditions to enable them to
\nreasonably calculate their business risks.<\/p>\n
______________ 30______<\/p>", "url": "https:\/\/jawawa.id\/newsitem\/foreign-investors-awaiting-more-stable-environment-1447893297", "image": "" }, "sponsor": "Okusi Associates", "sponsor_url": "https:\/\/okusiassociates.com" }