Batam, Purwakarta named top investment areas

Batam, Purwakarta named top investment areas

Sari P. Setiogi, The Jakarta Post, Jakarta

A non-governmental organization specializing in research on
autonomy, Regional Autonomy Watch (KPPOD) has named Batam and
Purwakarta Regency in West Java as the most attractive investment
destinations in the country during 2003.

KPPOD made the decision based on various criteria including
local regulations, government services, socio-political factors,
regional economic dynamism, labor productivity and physical
infrastructure.

"Batam has been successful in supporting business activities
on the island," said KPPOD official Bambang P.S. Brodjonegoro at
a press conference on Tuesday held to unveil KPPOD's latest
survey

Batam, which is located 20 kilometers away from Singapore,
hosts around 611 foreign firms from various countries. The
industrial island has been operated as a bonded zone area, and
the government is debating whether to turn it into a free trade
zone, which would mean that exporters operating on the island
would be allowed to import raw materials without paying customs
duties and taxes, pending their eventual processing,
transshipment or reexport.

Batam was declared an industrial bonded zone in 1978 to lure
investments and foster export competitiveness. Since then, the
island has become the country's main industrial center, where 70
percent of economic growth comes from the export-oriented
manufacturing sector.

Meanwhile, Purwakarta, which has been named as the best
regency in terms of investment, benefits from its vicinity to
Jakarta, thus allowing it to have better infrastructure compared
to other regencies.

The government has been trying hard to boost domestic and
foreign investment in the country to help accelerate economic
growth, which has been mainly driven by domestic consumption..

But during the past couple of years, investments have been
scarce partly due to the poor implementation of the regional
autonomy policy which gives regional administrations more power
in managing their economic affairs. Many companies have often
complained about the ineffective bureaucracy in the regions, and
aggressive move by local governments to tax businesses.

According to data from the Investment Coordinating Board
(BKPM), approved foreign direct investments (FDIs) last year
stood at US$13.21 billion compared to $9.79 billion in 2002.

However, only $5 billion were for completely new projects,
with the remainder being expansion by existing companies and
changes in the status of local firms into foreign companies as
they were bought by overseas investors.

The KPPOD hopes the annual survey can help prospective
investors in selecting investment destinations in the country.

Minister of Finance Boediono who attended the awards ceremony
on Tuesday urged local administrations to take measures to
improve the local investment climate.

"It would be good if the regional administrations could write
down their action plans for the next one or two years, as a
promise for prospective investors," Boediono said.

The KPPOD's latest survey involved 156 regencies and 44
municipalities in 29 provinces. Respondents came from 1,540
business players -- 58.5 percent were business owners, while the
remainder were business executives.

KPPOD's list of top investment places in RI

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Top five regencies:

Purwakarta, West Java
Magetan, East Java
Bulungan, East Kalimantan
Jembrana, Bali
Kuningan, West Java

Top five municipalities

Batam, Riau
Cirebon, West Java
Kediri, East Java
Sawahlunto, West Sumatra
Cilegon, Banten