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)