Words won't lure investors<\/p>\n
Kornelius Purba, Staff Writer, The Jakarta Post, Jakarta,
\nkorpur@yahoo.com<\/p>\n
Recently, the growing beard of Japanese envoy Yutaka Iimura
\ngave the impression among Indonesians that he probably had a
\nnadar (vow) -- that he would not shave until he succeeded in
\nconvincing President Megawati Soekarnoputri that Japanese
\ninvestors would continue to flee from Indonesia, unless she took
\nextraordinary economic policies to woo back investment from the
\nworld's second most powerful economy after the United States.<\/p>\n
According to one of his aides, the ambassador had to shave his
\nbeard when he made a business trip to Tokyo, but he started
\nregrowing the beard upon his return to Jakarta. His vow might
\nhave led him to grow the beard even longer until he could have
\nbeen mistaken for a Taliban member -- while he witnessed the
\nclumsy progress made by the President and her Cabinet to restore
\nthe chaotic investment climate, and the hardening attitude of the
\nIndonesian Military (TNI) top brass on Aceh.<\/p>\n
\"He looks handsome with his beard,\" said a Japanese banker on
\nTuesday, who then pointed out that many Japanese companies had
\nnearly lost hope regarding the government's seriousness in
\nregaining the trust of foreign investors. Last year, the total
\nvalue of Japanese investment was only US$300 million, and mostly
\nfrom small scale enterprises, such as the suppliers of automobile
\nspare parts.<\/p>\n
Japan is accumulatively the biggest money lender to Indonesia
\nand its private sector is also the biggest investor, while Japan
\nis also the biggest importer of Indonesian products.<\/p>\n
Some American and British businessmen expressed their surprise
\nwhen they saw how the usually reserved Japanese executives
\nbluntly told Indonesian ministers that the government should stop
\ngiving empty promises and instead issue concrete measures for
\nprivate corporations.<\/p>\n
Their critical view is also shared by other foreign
\nbusinessmen and at least one envoy from a neighboring country.
\nMany foreign companies have abandoned Indonesia, while many
\nothers have decided to stay because they have invested too much
\nhere, and are just waiting for a miracle.<\/p>\n
The investors' complaints included rampant corruption,
\nworkers' demands, uncontrollable regional autonomy, taxation
\nproblems, complicated and vicious custom and excise system, and
\nthe greediness of political parties.<\/p>\n
But how could President Megawati convince foreign investors to
\nexpand their business to Indonesia when they could not even
\nunderstand her message to them? Her address to them last month
\nwas in the Indonesian language.<\/p>\n
Also, could the Cabinet expect foreign companies to pour fresh
\nmoney to Indonesia, when key economic ministers like Coordinating
\nMinister for the Economy Dorodjatun Kuntjoro-Jakti and Minister
\nof Finance Boediono were absent from an event where the foreign
\nbusiness circle expected a major announcement from the
\ngovernment?<\/p>\n
An Asian businessman, who was invited along with other 300
\nforeign business executives, to the official launching of Invest
\nin Indonesia Year 2003 at Istana Merdeka late last month,
\ndescribed his frustration because the President only used Bahasa
\nIndonesia in her speech, with no English translation.<\/p>\n
It was more upsetting when he realized that the only concrete
\nresult of the ceremony was the signing of the first stamp to mark
\nthe year of investment by the President.<\/p>\n
\"We are really disappointed, it was just a waste of time,\"
\nsaid the businessman, who had hoped that Megawati would announce
\nsome new tax incentives, or that they would have the opportunity
\nto have a dialog with the President or her ministers, an
\nopportunity often available with former presidents B.J. Habibie
\nand Abdurrahman Wahid.<\/p>\n
But the guests only heard the President's old song -- \"We need
\nto keep improving our economic basics to create a good investment
\nclimate.\"<\/p>\n
The President has visited at least 27 countries and of course,
\nthe state has spent millions of US dollars for her travel
\nexpenses, as she believes her psychical presence in those
\ncountries is very effective to lure foreign investment. However,
\nit is very difficult for Investment Coordinating Board (BKPM)
\nchairman Theo F. Toemion to back this up with concrete investment
\ndata.<\/p>\n
Foreign direct investment (FDI) continues to decline. FDI
\napprovals -- excluding those in the energy and financial sectors
\n-- plunged by 35 percent to US$9.7 billion last year from $15.06
\nbillion in 2001.<\/p>\n
Concurrently, domestic investment approvals has nose-dived
\neven more to Rp 25.26 trillion (US$2.8 billion) in 2002, 57
\npercent lower than the Rp 58.62 trillion in the previous year.<\/p>\n
The problem is that the Cabinet has only been busy making
\npublic statements without concrete policies to convince
\ninvestors. In response to severe criticism over the allegedly
\ncrooked Customs and Excise Office, the President only replaced
\nits chief, and the old system remains -- it has not been changed
\ninto a pre-shipment system as demanded by many.<\/p>\n
The labor issue is likely the most crucial for the private
\nsector. Investors believe the increase in wages should also be in
\nline with rising productivity.<\/p>\n
The President may think investors will come soon to Indonesia
\nafter launching Invest in Indonesia Year 2003, and Dorodjatun
\nfeels confident after making lengthy speeches in various fora.<\/p>\n
But as to the measures which should be taken, \"There are
\nhundreds of things that can be done very quickly to improve the
\nsituation,\" said World Bank country director for Indonesia Andrew
\nSteer about investment in Indonesia.<\/p>",
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"sponsor": "Okusi Associates",
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