Central and regional administrations to cooperate in investment projects

Urip Hudiono, The Jakarta Post, Jakarta

The central government has decided concentrate on regional investment as it extends last year's Indonesian Investment Year program until 2005.

"We expect full cooperation and active participation of all local administrations in promoting investment in their territories," Investment Coordinating Board (BKPM) head Theo F. Toemion said during the signing of a memorandum of understanding (MOU) on Monday between the board and all the country's 30 provincial administrations.

The Indonesian Investment Year program was launched in February last year by President Megawati Soekarnoputri to boost investment.

BKPM data shows domestic investment approved by the board in 2003 reached Rp 48.8 trillion (US$ 5.74 billion), an increase of 92 percent from 2002.

Foreign investment, meanwhile, was recorded at $14.7 billion, a growth of 50 percent.

But experts have said a large part of the foreign investment figure consisted of existing domestic investments switching to foreign investment schemes.

Foreign money flowing into the country has remained weak due to uncertainties and problems at home.

Coordinating Minister for the Economy Dorodjatun Kuntjoro- Jakti said the MOU was a positive step for promoting investment in the country.

"It will help dispel the current perception that the recent regional autonomy policy has only brought uncertainty for investment," he said.

Indonesia still needed more investment to further boost the country's economy, he said.

During the past few years it had been growing at a "mediocre" rate of about 4 percent due to poor investment and sluggish exports.

The government has set a growth target of 4.8 percent this year. A healthy investment market is crucial for the economic growth necessary to create sufficient jobs for millions of unemployed people.

Meanwhile, BKPM deputy head Yus'an said local administrations would still be given freedom under the regional autonomy policy to manage investments in their own territories.

"It will be better, however, if there is a concerted coordination and cooperation between the administrations and the central government," he said.

The cooperation, explained Yus'an, would include the provision of information and promotional materials, the identification of areas with investment potential, and the creation of favorable conditions.

The latter should include the abolishment of local regulations which could inhibit investment.

The government is also preparing several other policies to promote investment in the country.

These include the drafting of a new, unified investment law to replace Law No. 1/1967 on foreign investment and Law No. 6/1968 on domestic investment, as well as the setting up of a "one-tier" investment service system.