'Uncertainty over investment law deters investment'<\/p>\n
Adianto P. Simamora, The Jakarta Post, Jakarta<\/p>\n
Despite the improving political stability and strengthening
\nmacroeconomic indicators, many foreign investors remain reluctant
\nto make new investments in the country due to uncertainty over
\nthe issuance of a long-awaited new investment law, Chairman of
\nthe Investment Coordinating Board (BKPM) Theo Toemion said.<\/p>\n
\"There have been positive progress in other areas, but
\ninvestors are still waiting for the (new) investment law,\" he
\ntold lawmakers on Wednesday during a hearing session with the
\nHouse of Representatives Commission V on industry and investment.<\/p>\n
Theo said that the draft of the investment law, which was
\nplanned seven years ago, had been submitted to the Ministry of
\nJustice and Human Rights and was now in the hands of the office
\nof the State Secretary.<\/p>\n
The new law will replace Law No. 1\/1967 on foreign investment
\nand Law No. 6\/1968 on domestic investment.<\/p>\n
Under the draft law, the BKPM will be tasked to set up a one-
\nstop service for providing investment licenses in a bid to speed
\nup the licensing process and cut down on the bureaucracy. This
\nrole is apparently opposed by some ministers and regional
\nadministrations who would lose their licensing authorities.<\/p>\n
Another controversial article of the bill involves a proposal
\nto provide investment incentives, including tax holidays, to lure
\ninvestors, which has been rejected by the Ministry of Finance.<\/p>\n
The draft law also aims to ensure equal government treatment
\nto both foreign and domestic investors.<\/p>\n
\"This indicates that the government does not have the
\npolitical will to attract new investments to the country,\"
\nlegislator Irmadi Lubis said.<\/p>\n
He urged the government to immediately submit the draft to the
\nHouse for deliberation.<\/p>\n
Attracting new investments is seen as crucial in pushing the
\ncountry's economy to grow at its potential growth rate of 6
\npercent per year, in order to absorb the millions of people made
\njobless by the late-1990s economic crisis. The government
\nprojects a meager 4 percent growth for this year.<\/p>\n
Analysts have said that the hard gained appreciation of the
\nrupiah against the U.S. dollar, the declining interest rate and
\nthe benign inflation environment had not been able to lure a
\nsignificant amount of new investments due to lingering problems,
\nsuch as a weak legal system, rampant labor protests and smuggling
\nactivities.<\/p>\n
Theo said, however, that there had actually been positive
\nprogress in resolving these problems.<\/p>\n
For the past several years, investments -- particularly
\nforeign direct investments (FDIs) -- have been on a declining
\ntrend. In 2002 for example, FDI approvals dropped by 35 percent
\nto US$9.7 billion from $15.06 billion the previous year, while
\ndomestic investment approvals plunged by 57 percent to Rp 25.26
\ntrillion from Rp 58.62 trillion.<\/p>\n
The BKPM reported that realized investment in the first five
\nmonths of this year reached $918.2 million, out of $4.02 billion
\nin approvals. It did not provide a comparative figure for the
\nsame period in the previous year.<\/p>",
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