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
---------------------------------------------------- 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