Fri, 25 Apr 2003

Aussie investors still keen on RI: IABC

Adianto P. Simamora The Jakarta Post Jakarta

Australian investors are still eager to invest in Indonesia, but the government must swiftly take action to resolve pressing problems in doing business here, the Indonesia-Australia Business Council (IABC) said. ABC chairwoman Elly Hutabarat said that both existing Australian investors and prospective ones had temporarily delayed their plans due to the unfavorable investment climate. "They are now waiting for the government to seriously tackle the long-standing problems," Elly told The Jakarta Post. Legal uncertainty and poor implementation of regional autonomy are among the problems, she said. "We actually have good laws, but enforcement is weak." Elly said that Australian investors expected the government to implement the concept of equality before the law for both domestic and foreign investors. Despite the ups and downs in political relations between the two countries, bilateral trade and investment have remained strong. Australia is one of Indonesia's largest foreign investors. Today, there are about 400 Australian companies operating across the country with total investment of about A$6 billion (Rp 3.1 trillion). The majority of investment is in mining, financial services and beverage sectors. In 2002, the value of bilateral trade in goods and services totaled A$9 billion, with Indonesia enjoying a trade surplus of A$1.4 billion. The Indonesian government has said it plans to double trade value between the two countries to A$15 million in the coming years. The government has repeatedly promised to work hard to resolve various pressing problems to prevent existing investors from fleeing the country. The year 2003 has been declared the Investment Year, a campaign aimed at restoring investor confidence in the country since it plunged into a political and economic crisis in 1998. Elly said Indonesia lagged behind its neighbors in attracting investment. "Neighboring countries are now intensively offering attractive packages to investors, such as tax incentives. But we offer nothing." She advised the government to establish a special public relations unit to help promote the country among global investors. "This is one of the ways to help regain investor confidence. It will campaign for all the policies and actions already taken by the government to improve the investment climate." Elly added that cutting down on bureaucracy and speeding up investment licensing procedures were also crucial. The central government must also supervise implementation of regional autonomy, she added, as local governments were implementing regulations that scared away investors. Jakarta has often blamed regional governments for the sharp decline in investments in the country. Many of the local administrations, suddenly invested with far-reaching powers, have been accused of squeezing investors with new revenue-seeking policies.