Experts welcome move to ease investment procedures

Experts welcome move to ease investment procedures

Urip Hudiono, The Jakarta Post/Jakarta

While welcoming the government's most recent plan to improve the
country's investment climate by reducing the time required for an
investment permit to just 30 days, analysts are questioning how
the government will actually implement the plan.

National Economic Recovery Commission (KPEN) chairman Sofyan
Wanandi told The Jakarta Post on Tuesday that what was most
important was how the Office of the Coordinating Minister for the
Economy would ensure coordination between all the institutions
involved in the investment process under the Investment
Coordinating Board (BKPM).

"The government should particularly focus on the agencies
within the Ministry of Finance and the Ministry of Trade and
Industry, as well as local administrations," he said.

Under the Local Autonomy Law (No. 22/1999), local
administrations headed by governors, regents and mayors have a
say in all matters relating to investment within their respective
jurisdictions.

Sofyan pointed out that the main problem to date was that
local administrations were often reluctant to work together with
the BKPM.

"Their chief executives act like petty kings, and often
disregard the BKPM in matters concerning investment," he said.

The BKPM should therefore be given greater powers if the
government really intended to reduce the current cumbersome
bureaucracy, Sofyan said.

In a bid to attract badly needed foreign direct investment
(FDI), Coordinating Minister for the Economy Aburizal Bakrie said
last week that the government was working on cutting the time
needed for investors to obtain the necessary permits to 30 days
compared to 151 days at present, as revealed by a recent World
Bank survey.

The government would also implement set a time limit for the
approval of FDI applications, under which the application would
be considered approved if the BKPM failed to give its response
before the expiry of the statutory deadline.

Economist Didik J. Rachbini from the Institute for the
Development of Economics and Finance (Indef) agreed with the
proposal to automatically approve an investment application upon
the expiry of the set time limit, saying it would encourage the
various institutions involved to do their work in an efficient
and timely fashion.

"These institutions would be compelled to quickly process all
investment applications. Otherwise, the could be accused of
impeding investment into the country," he said.

Didik added however that it would be better for the government
to convert the BKPM into an investment promotion agency.

"Attracting investment is not just about slashing the time
needed to approve investment permits," he said. "It should be
more about promoting the country, including building high-level
diplomatic ties with potential investor countries."

Didik also suggested that the government draw up a blacklist
of local administrations that had been found to be making it
difficult for investors to invest in their regions.

"If they do not show any interest in attracting investors,
then they should be excluded all the way," he said.

Meanwhile, analyst Umar Juoro from the Center for Information
and Development Studies (CIDES) disagreed with the time limit
proposal, arguing that it would be counterproductive and could
cause confusion among investors.

"Normally, if an application receives no response, it means
that it is rejected, not approved," he said.

"Anyway, why is it so difficult for the BKPM to issue an
approval or rejection on time? This, in my opinion, is the whole
point of improving the functions and credibility of the BKPM."