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.