No grounds for complacency<\/p>\n
The recent statement from a senior Japanese banker about the
\nattractiveness of Indonesia for foreign investors is yet another
\nconfirmation of the relatively better investment climate here as
\ncompared to other Asian \"green pastures\" such as China and
\nVietnam.<\/p>\n
Norimitsu Inaba of the Asian Development Bank therefore
\nrecommends that Japanese companies invest in Indonesia. Business
\nconditions in Indonesia, Inaba told a seminar in Tokyo earlier
\nthis week, are still much better than in those two other
\ncountries.<\/p>\n
A similar sentiment was expressed by Taiwanese businessmen who
\nvisited Indonesia a few months ago.<\/p>\n
Market mechanisms and infrastructure, the number of existing
\nprivate companies, the legal aspect of business activities and
\nthe economic management of this country are some of the factors
\ncited by Inaba as the competitive advantages which are better
\nprovided by Indonesia. The Taiwanese businessmen added the
\nrelatively low-cost labor and abundance of natural resources as
\nIndonesia's stronger points compared to other countries in Asia.<\/p>\n
More recently, the Australian Minister for Trade, Senator Bob
\nMcMullan, even went as far as to say that the recent media ban in
\nIndonesia will not dissuade Australian business people from
\ninvesting in Indonesia. He was here to lead a business delegation
\nto the \"Australia Today Indonesia 1994\" trade and cultural
\npromotion.<\/p>\n
Those foreign views, however, are in contrast to the growing
\ndomestic concern about the latest trend in investments in
\nIndonesia. No less a person than Coordinating Minister for
\nPolitical Affairs and Security Soesilo Soedarman earlier this
\nyear warned of Indonesia's declining ability to attract foreign
\ninvestments.<\/p>\n
Such concern is not groundless. Statistics show that the value
\nof foreign direct investments in Indonesia in 1993 substantially
\ndecreased to US$ 8.14 billion last year from $ 10.32 billion a
\nyear earlier.<\/p>\n
The first five months of this year showed a marked increase in
\nnew investment commitments, reaching a total value of $ 5.1
\nbillion compared to $ 4.1 billion in the corresponding period of
\n1993. And the government is optimistic that foreign investment
\ncommitments this year will exceed $ 10 billion.<\/p>\n
However, Minister for Investment Development Sanyoto
\nSastrowardoyo immediately added a note of caution when he
\nannounced the latest figures last week. Not all of the investment
\ncommitments have been implemented despite government
\nencouragement. Of the domestic investment commitments, only 73.8
\npercent have been implemented. In the foreign investment arena,
\nonly 51.3 percent of the $74.9 billion committed since 1967 have
\nbeen realized.<\/p>\n
It is hard to disagree with the foreign opinions mentioned
\nabove. Indonesia, in fact, still has some advantages in terms of
\nforeign investment climate as compared to newly opening \"green
\npastures\" like China, Vietnam, or even India.<\/p>\n
On the other hand, in recent years the speed of change in
\nthose countries in terms of foreign investments seems to be
\ngreater. And the gap is narrowing when we talk about comparative
\nadvantages between Indonesia and those other Asian countries.<\/p>\n
On top of that it should be pointed out that within the
\ncurrent five-year development plan Indonesia needs about $ 222
\nbillion investments from the private sector, both foreign and
\ndomestic, to be able to maintain a required GDP growth of more
\nthan five percent a year and to accommodate the estimated 2.5
\nmillion new entrants a year to the labor market. A 10-billion-
\ndollar influx a year would still leave a very big hole to cover.<\/p>",
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"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
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