Provinces woo investment<\/p>\n
More provincial and regency administrations have increasingly
\nrealized the importance of investment to expand their local
\neconomies, generate jobs and create new, bigger sources of fiscal
\nrevenue.<\/p>\n
Gone are the times when most regional administrations,
\neuphoric about their new-gained power after the launching of
\nregional autonomy in 2001, simply flexed their muscles to grab a
\nbigger share of the wealth from their natural resources and
\nresorted to easy, unsustainable ways of raising revenue by
\nsqueezing companies with additional levies.<\/p>\n
Local administrations that previously depended mainly on the
\nInvestment Coordinating Board in Jakarta for investment
\npromotion, have taken the initiative to woo new investment to
\ntheir respective areas, fully realizing that private capital
\noutlay is the only effective means for them to provide jobs for
\ntheir people.<\/p>\n
The latest example is the recent investment promotion mission
\nsent by the West Java provincial administration to Singapore
\nwhere the province's top officials briefed international
\nbusinesspeople on investment opportunities and promised
\ninternational investors more expedient business licensing and a
\nmore conducive investment climate.<\/p>\n
West Java Governor Danny Setiawan also said in Jakarta last
\nweek that his administration would host an infrastructure summit
\nin Bandung in August to woo investors to invest in toll roads,
\nthe airport, seaport, water supply and waste management and many
\nother basic infrastructure.<\/p>\n
Earlier, the Jambi, North Sumatra, Riau and Batam
\nadministrations had made similar missions to Singapore, the first
\ngateway to woo foreign investors because the city is home to the
\nSoutheast Asian regional offices of most multinational companies.<\/p>\n
The Sleman Regency administration in Yogyakarta province and
\nthe Semarang mayoralty in Central Java have begun publicizing an
\naudited balance sheet. In a way, these financial disclosures also
\nare a means of wooing investment because the regular publishing
\nof audited balance sheets is the first of a string of
\nrequirements in the process needed for local administrations to
\nfloat municipal bonds. Credit rating agencies need to analyze the
\nfinancial reports of an administration to determine its credit
\nrating, which is the main component for setting the price of
\nbonds.<\/p>\n
The regional initiatives to attract investment should be
\nwelcomed as one of the biggest benefits of regional autonomy. We
\nare looking forward to a time when provinces or regencies compete
\nwith each other to woo domestic and foreign investment.<\/p>\n
Especially now as provincial governors, regents and mayors
\nhave to compete in direct elections, economic records that
\ndirectly benefit the people are surely the most effective means
\nof gaining voter support. This means that job creation will be
\nthe most important yardstick to measure the performance of a
\nregional chief executive. Consequently, regional chiefs --
\nwhether governor, regent or mayor -- must be business friendly,
\nmeaning that their economic policies and public services must be
\ndevoted to stimulating investment.<\/p>\n
It is private investment that creates jobs, which in turn
\ngenerate purchasing power for locals and consequently create a
\nmarket demand for numerous goods and services from which local
\nadministrations can raise levies. Private capital outlays are
\nsorely needed to increase the economic capacity as private
\nconsumption, the main locomotive of growth over the last four
\nyears, has begun to lose steam, and the government, overburdened
\nwith huge domestic and foreign debts, is deprived of significant
\ninvestment capacity.<\/p>\n
Further down the line, business-friendly local
\nadministrations will contribute greatly to national economic
\ngrowth because most of the country's abundant natural resources
\nsuch as forests, agriculture, fisheries, mining, tourist
\nattractions are located in the provinces and regencies.<\/p>\n
But local administrations and regional legislative councils
\nshould realize that the most important element of business-
\nfriendly policies and conducive investment climate should be good
\ninstitutions and bylaws that can serve as risk-management tools
\nfor investors working in a highly-complex market economy.<\/p>\n
A business-friendly governor or mayor could raise controversy
\nor come constantly under suspicions of collusion with
\nbusinesspeople if the legal and licensing frameworks for
\nbusinesses are not transparent and are not subject to high
\nstandards of accountability.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/provinces-woo-investment-1447893297",
"image": ""
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"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
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