Businessmen hail joint development area

Businessmen hail joint development area

JAKARTA (JP): The Indonesian and Australian governments'
agreement last Friday to develop a joint development area linking
the two countries' bordering territories has won applause from
businessmen on both sides.

Many believe the planned opening of the growth center area
covering Indonesia's eastern parts plus Bali and the Australian
continent is a breakthrough not only in terms of enhancing
bilateral economic relations but also in speeding up development
in Indonesia's least developed areas.

However, some have expressed skepticism, given the lack of
infrastructure in Indonesia's eastern provinces.

Chairman of the Indonesian Chamber of Commerce and Industry
(Kadin) Aburizal Bakrie said the success of the Australia-
Indonesia Development Area (AIDA) would depend much on the
Indonesian government's ability to improve infrastructure in its
eastern provinces.

"Only if there is adequate infrastructure will investors come
and invest in the eastern provinces," he said.

Over the past five years, the Association of Southeast Asian
Nations (ASEAN) has established three subregional growth areas to
facilitate business activities in their bordering areas.

The first growth area is called the Indonesia-Malaysia-
Singapore Growth Triangle, or Sijori, which integrates
Indonesia's province of Riau, the Malaysian state of Johor, and
Singapore.

The second is the Indonesia-Malaysia-Thailand Growth Triangle,
which joins Aceh, North and West Sumatra in Indonesia, Thailand's
southern provinces and Malaysia's western states.

The Brunei-Indonesia-Malaysia-Philippines East ASEAN Growth
Area is the latest. It groups the Indonesian provinces of Central
and South Kalimantan and Central, South and Southeast Sulawesi
with the Malaysian province of Sarawak, the Philippines' southern
provinces and Brunei.

Business activities on Batam and Bintan islands in Riau, part
of the Sijori cooperation area, have increased rapidly over the
past five years because of the Indonesian government's strong
backing. The Indonesian government has given tax breaks to
regional investors. Furthermore, the procedures for obtaining
investment licenses in the two provinces are no longer a problem
because the government has established a special body to serve
investors.

The investment climate and trade activities in the other two
growth areas are much different. Many business activities have
been stalled because of difficulties in obtaining investment
licenses.

The delays occurred because all the investment licenses,
especially those applied by foreign investors, needed to be
approved by the Investment Coordinating Board (BKPM) in Jakarta.

Businessmen have complained that those wanting to invest in
areas which are part of the subregional growth centers receive no
special treatment, except those in the Sijori triangle.

The Indonesian government recently announced a plan to abolish
exit taxes to encourage the subregional economic cooperation with
other ASEAN members. The plan, however, has not yet been
implemented.

On the planned growth zone with the Australia, Aburizal said
that besides improving the infrastructure in Indonesia's eastern
areas, both countries should also ease procedures for issuing
business visas for people working in the planned economic zone.

Businessmen in Sulawesi could, for example, get an entry visa
for Australia from the provincial capital.

Unlike when going to Australia, Indonesian citizens are no
longer required to apply for visas when visiting other ASEAN
countries.

Aburizal, also the chairman of the Bakrie Group, said the
Indonesian and Australian governments should improve the
transportation facilities in the cities involved in the planned
economic zone.

"Increasing both sea and air transportation links should be a
priority," he said, because many cargoes going to Australian
cities can not be delivered because of inadequate transportation
infrastructure linking the two countries. (hen)