Thu, 11 Dec 2003

Businesses want CGI to help fix investment climate

Rendi A. Witular, The Jakarta Post, Jakarta

Business communities urged the Consultative Group on Indonesia (CGI) to push the government to focus immediately on improving the country's investment climate in order to attain sustainable economic growth.

National Economic Recovery Committee (KPEN) chairman Sofjan Wanandi told The Jakarta Post that it was now imperative for the CGI and the government to fix the investment climate, encouraging the real sector to drive economic recovery.

"We want the CGI and the government to focus on improving our unfavorable investment climate so that our economic growth will not depend anymore on a consumer-driven base, which is unsustainable," he said.

Sofjan and other business representatives made the requests on Wednesday during a luncheon with CGI representatives and several high-ranking government officials.

Aside from Sofjan, who was representing the Indonesian Chamber of Commerce and Industry (Kadin), other representatives included those from the International Business Chamber (IBC), the Jakarta Japan Club Foundation (JJCF) and the American Chamber of Commerce in Indonesia (AmCham).

Officials of the country's traditional donor grouping met here for a two-day annual gathering to decide on a new loan commitment to help finance the 2004 state budget.

During the luncheon, business representatives launched several key issues that had long been denting the confidence of foreign investors from entering the country.

Kadin, for example, raised a key labor issue, emphasizing the increasing difficulties companies experienced in dealing with labor, and the inability of the government -- particularly the Ministry of Manpower and Transmigration -- to function as a neutral arbiter in labor disputes.

Kadin also raised concerns over the government's labor policies, some of which it considered irrational.

The IBC expressed its concerns over the need for legal reform, as the weak legal system had created business uncertainties.

It also complained about the lack of adequate infrastructure to support business activities.

Meanwhile, the JJCF focused on tax and customs administration. One of the points it raised was the lack of transparency in tax regulations, which had created confusion among taxpayers and tax collectors in complying with the regulations.

Other issues raised by JJCF was the need for improved efficiency in customs clearance, reducing smuggling in the import and export sectors and comprehensive control and coordination among government agencies in clearance services.

AmCham raised issues in the mining and energy sector, stressing the lack of competitive policies.

Investment activities in the country have weakened since the late 1990s financial crisis. Without higher investment performance, the country's economy could not grow by between 6-7 percent, a level deemed necessary to help resolve the huge unemployment problem.