The go-east policy<\/p>\n
Since January 1990 President Soeharto has repeatedly stressed
\nthe need to help the eastern region of the country to catch up
\nwith the other more developed islands. The President's statements
\nhave prompted a host of seminars urging investors to go east and
\nthe central government to give special assistance to the widely
\nscattered chain of islands east of Bali.<\/p>\n
But we think the establishment of the Development Council for
\nEastern Indonesia and its first meeting on Monday are the only
\nmajor concrete steps so far taken towards the realization of all
\nthe verbal commitments and lip service heard over the past five
\nyears.<\/p>\n
Judging from the structure and composition of the high-powered
\ncouncil, the government really means business. The council,
\nchaired by Minister of Research and Technology B.J. Habibie,
\nincludes 13 ministers, high officials and former governors of the
\neastern provinces.<\/p>\n
The four task forces already set up by the council -- natural
\nresources and environment, human resources and technology,
\ninfrastructure, and institutions -- ensures that the development
\nof the eastern region will be based on fully-integrated programs.<\/p>\n
The eastern islands -- Sulawesi, Nusa Tenggara, Maluku and
\nIrian Jaya -- which have long been left out of the mainstream of
\nprogress and development pose a formidable challenge indeed. They
\naccount for almost 41 percent of the country's total land area,
\nbut are inhabited by only 13 percent of the total population.
\nThey also constitute groupings of widespread chains of islands.<\/p>\n
Decades of being left out of the mainstream of national
\ndevelopment have caused not only huge infrastructure problems but
\nalso poverty. The 1993 survey by the Central Bureau of Statistics
\nconcluded that almost one fourth of the 26 million Indonesians
\nstill living below the poverty line were located in the eastern
\nislands. Worse still, these islands have steadily lost many of
\ntheir brightest people to Java and other more developed areas of
\nthe country.<\/p>\n
Such least developed areas are obviously least attractive to
\nprivate investors. The only major industries which have developed
\nin those areas so far are extract businesses, such as mining,
\nfishing and logging. Many wood-processing plants have operated
\nthere, but their establishment was forced in the first place by
\nthe government ban on log exports in 1985. Worse still, the few
\nindustrial establishments have been operating as \"modern
\nenclaves\" isolated from the surrounding communities in mostly
\nundeveloped areas. These establishments have even caused the
\nimpression among the local people that their areas are being
\nraped for the benefit of Java.<\/p>\n
It is the obligation of the central government to develop the
\nnecessary basic infrastructure in the eastern region. But given
\nthe severely limited capacity of the state budget it is likely to
\ntake several decades before adequate infrastructure can be
\ninstalled to attract private investors.<\/p>\n
The most feasible alternative, as suggested by the council, is
\nto provide special incentives to businessmen willing to unlock
\nthe abundant natural resources in those islands. Among the
\nincentives being mulled over are tax holidays, concessional loans
\nwith longer grace periods and income tax exemptions for
\nemployees. These incentives are crucial for attracting private
\ninvestors because the capital costs of industrial projects in the
\neastern islands are much higher than those in the more developed
\nareas in the western region. Investors, for example, have to bear
\nthe costs of basic infrastructure and other support facilities
\nand have to offer much higher salaries and more fringe benefits
\nto attract skilled manpower to work in the frontier areas.<\/p>\n
The new tax laws empower the government to provide such tax
\nincentives. The problem is how to administer the incentives so as
\nto attract the kind of investment ventures most wanted in those
\nislands.<\/p>\n
Another delicate problem inherent in the development of the
\neastern frontier areas is related to local hiring. The
\ngovernment, we think, should see to it that investors will hire
\nas many employees as possible locally and, if necessary, invest
\nin training and education. Taking the easiest way of simply
\nhiring from Java and other developed areas will cause potential
\nproblems by widening the gap between immigrants and native
\npeople. That might heighten the ill feeling among the local
\npeople that their areas are being raped only for the benefit of
\nJava and other developed islands. Such disillusionment naturally
\ndoes not support the archipelagic concept that is precisely the
\nvision to be enhanced with the accelerated development of the
\neastern region.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/the-go-east-policy-1447893297",
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"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
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