Japanese investors may target China, warns JETRO<\/p>\n
Adianto P. Simamora, The Jakarta Post, Jakarta<\/p>\n
The Japan External Trade Organization (JETRO) warned that more
\nJapanese investors would shift their investment plans to China if
\nthe government here failed to improve the investment climate and
\nprovide tax incentives.<\/p>\n
President of JETRO's Jakarta Center Hiroyuki Kato said on
\nWednesday that since the country plunged into a combination of
\neconomic and political crises in the late 1990s, Indonesia had
\ngradually lost its charm for foreign investors.<\/p>\n
\"The government must take steps as quickly as possible to
\nprovide incentives if they want to attract foreign investors,
\nparticularly Japanese, to this country,\" Kato told The Jakarta
\nPost on Wednesday.<\/p>\n
He explained that China had become a favorite investment
\ndestination for Japanese investors because its government had
\nbeen actively providing various incentives, in addition to the
\nfavorable investment climate and the availability of cheap and
\nhigh quality raw materials.<\/p>\n
Kato gave as an illustration the fact that Japanese investment
\nin China had increased by 85 percent during the April-September
\n2001 period, while Japanese investment in Indonesia had declined
\nby 18 percent during the same period.<\/p>\n
\"I'm afraid that more Japanese investors will continue to
\nselect China if the government does not take immediate action to
\nprovide (tax) incentives,\" he said.<\/p>\n
JETRO has repeatedly called on the government to provide tax
\nholidays to allow the country to compete with neighboring nations
\nin attracting foreign investment, particularly from Japan.<\/p>\n
The organization said that if the government were to provide
\nsuch tax incentives, Japanese investment here would increase and
\ncould generate up to 80,000 jobs per year.<\/p>\n
\"I have met with both the Coordinating Minister (for the
\nEconomy) Dorodjatun Kuntjoro-Jakti and Minister of Finance
\nBoediono to discuss this problem, but the ministers did not give
\nany clear answers,\" Kato said.<\/p>\n
Japan is the largest foreign investor in Indonesia. Last year,
\nforeign direct investment (FDI) approvals dropped to US$9 billion
\nfrom $15.42 billion.<\/p>\n
Since the 1997 regional financial crisis, the Southeast Asia
\nregion had been losing out to China in attracting FDI. With
\ncheaper labor costs and high economic growth, China absorbs about
\nhalf of all FDI in Asia, excluding Japan. All the Southeast Asian
\nnations combined get only 20 percent.<\/p>\n
There are now growing fears among Southeast Asian nations that
\nwith the entry of China into the World Trade Organization (WTO),
\nChina will lure more investors away from the region.<\/p>\n
The Investment Coordinating Board (BKPM) is proposing the
\nlaunching of a tax holiday scheme to attract foreign investment.
\nThe board's chairman, Theo Toemion, claimed that he had already
\nobtained the support of President Megawati Soekarnoputri for the
\nplan, although he admitted that it would still have to be
\ndiscussed by the Cabinet, probably at the end of the first week
\nof May.<\/p>\n
But Boediono is likely to object to the proposal on account of
\nthe current weak fiscal situation.<\/p>",
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"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
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