Wed, 04 Aug 2010

From: The Jakarta Globe

By Muhammad Al-Azhari
Jakarta. Indonesia could be a prime target for UK investment if it cleared some pitfalls, British Ambassador Martin Hatfull said on Tuesday.

The government must overcome corruption, confusing regulations and impediments like the negative investment list if it wanted to realize its full potential as an investment magnet, he told the Jakarta Globe.

Hatfull said Britain under the leadership of Conservative coalition Prime Minister David Cameron was trying to rebuild the economy by shifting its focus “away from Europe to more emerging markets.”

According to the Indonesian Investment Coordinating Board (BKPM), British investment topped $587 million in 2009, after falling to $513 million in 2008 due to the global economic crisis. The figure in 2007 was $1.69 billion.

Hatfull, who was posted to Indonesia two years ago after a stint in Japan, said it was vital for Indonesia to tackle corruption if it wanted to expand trade with Britain.

This was especially pertinent as the UK was preparing a law that would prosecute British firms found to have engaged in corrupt business practices overseas.

“It will make all British companies look much harder at any market to see what the risks are,” the envoy said.

He said most foreign investors were reluctant to deal with the Indonesian judicial system because they did not trust it.

“A British guy from one private-sector business who has experienced working in Indonesian said: Do not get involved in litigation in Indonesia - stay out of the courts.’ Clearly there’s a problem that needs to be resolved.

“There are lots of British companies interested in investments,” because Indonesia offers real growth opportunities, but they needed reasons to be confident, Hatfull added.

He welcomed Indonesia’s recent move to ease limits on foreigners wanting to invest in certain sectors but said it was merely a small adjustment that did not significantly enhance business opportunities.

Indonesia has relaxed investment restrictions in the health care, agriculture and creative sectors, but still holds up walls for foreigners hoping to tap into sectors like telecommunication towers, broadcasting, education and alcoholic beverages.

The ambassador also pointed out inconsistencies with halal, or permissible, and haram, or forbidden, food requirements, as well as general regulations for setting up food production operations.

The country’s highest authority on Islamic affairs, the Indonesian Council of Ulema (MUI), is reportedly planning to require all imported halal foods to obtain its certification before it can be sold in the country.

Only about 20 percent of products that are now sold in Indonesia are certified as such by the council.

Hatfull said the problems faced by those wanting to enter the food business reflected the rest of the country’s regulatory nuisances.

Compared to the rest of Southeast Asia, the ambassador said “Indonesia is by far the strictest in terms of the numbers of different pieces of information” required to enter the industry.