'Incentives do not guarantee investment'<\/p>\n
JAKARTA (JP): A study conducted by the Indonesian Institute of
\nSciences has found that special facilities and incentives given
\nto investors did not guarantee an influx of foreign investments.<\/p>\n
\"Foreign investment in Indonesia is lagging far behind
\nMalaysia, for example,\" Awani Irawati, coordinator of the
\nresearch team on Indonesia and APEC in International Political
\nEconomy Development, said Tuesday.<\/p>\n
The study found direct foreign investment in Indonesia reached
\nUS$2 billion in 1993 and $2.10 billion in 1994, compared to
\nMalaysia's $4.34 billion and $5 billion over the same period.<\/p>\n
So if foreign investment is to be boosted the government has
\nto fulfill other requirements like the creation of a conducive
\nbusiness climate, legal certainty and efficiency, she said.<\/p>\n
\"Such things as weak infrastructure, licensing, inconsistency
\nin regulations and illegal levies discourage investments,\" she
\nwas quoted by Antara as saying.<\/p>\n
She said government deregulation packages like those issued on
\nMay 23, Jan 26 and June 4 in 1996, were partial measures.<\/p>\n
\"It is thus advisable for Indonesia to switch from a
\ndevelopment operational strategy, which is partial in nature, to
\none which is comprehensive and integrated. This strategy must not
\nrely on economic variables alone but must also involve
\nnoneconomic elements,\" she said.<\/p>\n
Touching on Indonesia's economic growth in the APEC forum, she
\nsaid Indonesia had three great opportunities.<\/p>\n
\"The first is that there will be a free flow of investment
\nwhich will bolster national industry. It has to be admitted,
\nthough, that national ownership of relevant industries will, as a
\nconsequence, weaken,\" she said.<\/p>\n
The second was related to the transfer of technology from a
\ndeveloped country, she said but added that caution must be
\nexercised because this may simply be the relocation of saturated
\nindustries or those with high pollution risks.<\/p>\n
The third was that Indonesia's population of 200 million
\npeople assured a big supply of manpower and potential consumers,
\nshe said.<\/p>",
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