Clearer policies vital to attract investors

JAKARTA (JP): The government's ambiguous policy on the role and shares of industries in the domestic market may shun prospective foreign and domestic investors from expanding their businesses in Indonesia, a businessman warned yesterday.

Sofyan Wanandi, president of the Gemala group of companies, told reporters yesterday that clear rules and transparency were needed to guarantee a sound investment climate in the country.

"I am afraid that if we continue to blame each other for the current economic situation, and bicker among ourselves, we will lose many opportunities," he said, responding to increasing rumors of cartels, monopolies and oligopolies in Indonesia, as hinted at last month by the World Bank.

According to the World Bank, such practices have caused high- economic costs in the country and escalated prices on the domestic market.

Earlier this week, State Minister of Investment Sanyoto Sastrowardoyo announced that his office, the Investment Coordinating Board, would not allow companies already holding 50 percent or more of the shares on the domestic market to expand their capacity.

On Tuesday he clarified his remarks, saying that industries holding more than 50 percent of the domestic market shares are still allowed to expand their capacity if any additional production is destined for the export market.

Sofyan, who is also an executive of the Prasetiya Mulya Foundation, said yesterday that such restrictions can only be applied if there are clear government regulations on this matter.

"If such restrictions were established, it must be for national interest," he said.

In the case of monopolies, Sofyan said that, as long as the government did not have any regulations against it, there should actually be no problem with their existence.

However, he pointed out that the market must be more open, to encourage investments, since relying on imports would cut back foreign exchange earnings.

"If, for example, an anti-monopoly ruling is needed for this purpose, then the government should make one and put it into effect clearly and transparently," he stressed.

Electricity supply, he cited, was easily controlled by the government through the monopoly of one of its state enterprises.

"If this can be applied to electricity, the government should also try to use a similar approach in other sectors. All they (the government) have to do is make regulations," he said.

The government, he said, should be able to control, manage and drive market forces so that the economy can run smoothly without excessive protection to anyone.

"As long as the government knows what is going on and is capable of taking quick steps and decisions, no problems should arise," he said. (pwn)