Economists doubt investment will come ahead of elections

Economists doubt investment will come ahead of elections

Adianto P. Simamora, The Jakarta Post, Jakarta

The government's launch of Invest in Indonesia Year 2003 will
lead to a dead end because no concrete action has been taken to
support the program and political uncertainty will increase ahead
of next year's elections, experts said.

They said the government would be busy with political events
over the next two years, leaving plans to boost investment
forgotten.

"I still don't believe foreign investors will eye Indonesia
this year. They will continue to wait and see over the next three
years," Dradjat Wibowo, an economist at the Institute for the
Development of Economics and Finance, told The Jakarta Post on
Friday.

President Megawati Soekarnoputri officially launched Invest in
Investment Year 2003 on Thursday. The goal of the program is to
improve the investment climate here in order to attract investors
to help push economic growth and create jobs.

Megawati, however, failed to outline any concrete measures to
address investors' concerns about security, legal certainty and
legal enforcement.

Sri Adiningsih, an economist at Gadjah Mada University, said
businesses operating in the country repeatedly voiced their
complaints to the government, but no action was ever take to
resolve these problems.

"Investors will of course remain reluctant to come here if the
government fails to take concrete action to resolve all of the
pressing problems as soon as possible.

"This will require an integrated effort involving various
ministries," Sri said.

Anton J. Supit, chairman of the Indonesian Footwear
Association, also urged the government to get serious about
dealing with the problems facing investors, singling out
corruption as particularly worrisome.

"I don't believe promotions are called for at the moment if
the situation remains unchanged.

"But still, we welcome this as better than nothing," he said.

As part of its efforts to promote investment, the government
plans to set up the National Investment Team to resolve pressing
problems facing existing investors.

The team will hold regular meetings with investors around the
country and then devise ways to resolve their problems.

The government also plans to establish a one-stop service
center for investors in order to speed up investment licensing
and cut down on bureaucratic hassles.

Currently, investors must go to several ministries to receive
a license, a process that can take months.

Dradjat, however, questioned the government's seriousness
about establishing the one-stop service center, pointing out that
it was still reluctant to give total investment licensing power
to the Investment Coordinating Board.

"That will be one of the main considerations for investors
considering investing here. Investors want smooth service, like a
one-stop service policy," he said.

Sri, meanwhile, said the return of investors to the country
depended very much on the seriousness with which Megawati
addressed investors' concerns.

These concerns include labor conflicts, high tax rates and
rampant illegal fees.

"Our taxes are relatively higher than neighboring countries.
The government must conduct a careful study of this to make us
more attractive to investors," Sri said.

She also suggested the government offer new incentives to
investors.

"All of the countries in the region, including Japan, are now
struggling to attract new investors and are offering them a lot
of incentives. So why don't we offer incentives?" Sri asked.