Sat, 29 Nov 2003

Export, investment teams

The business community reacted skeptically to the recent issuance of a presidential decree on the establishment of an Export and Investment Promotion Team, saying that this move would not significantly improve policy coordination -- nor would it expedite the decision-making process within the government.

Business leaders wonder what the team can do in the remaining 10-month tenure of the Megawati administration, as the new government that will take over in late October 2004 might simply disband the team anyway.

Moreover, the team has yet to convene its first meeting and form its core staff and set its working programs, operational procedures and other technical details.

At first glance, the team appears to be very powerful with a strong leadership, as it is headed by President Megawati Soekarnoputri herself and includes all coordinating ministers and other Cabinet members who are directly or indirectly involved with promoting export and investment.

The team will work mainly through two operational arms: the National Export Promotion Task Force, to be headed by the minister of industry and trade, and the National Investment Promotion Task Force, to be led by the chief of the Investment Coordinating Board. Both task forces have yet to be formed.

Notwithstanding the significant improvement in macroeconomic stability, the Megawati administration has been notorious for its acute lack of leadership in pushing through economic reform measures and for being virtually devoid of any sense of urgency and an appropriate sense of priority.

Given these constraints, one cannot avoid feeling that the executive order on the team's establishment was issued merely to fulfill, at least in its appearance, one of the targets stipulated in the government's White Paper on reform measures.

What is really needed is not another team, but a sense of urgency and effective leadership to implement what has been set out in the reform agenda. The monthly Cabinet meeting on economic affairs is already adequate to make and coordinate policies.

What has been missing so far from the monthly meeting is a true spirit of teamwork and an urgency to act, as discussions seem to be more a formality than a vigorous, thought-process about policy instruments.

The most outstanding shortcoming of the monthly meetings, though, is the absence of business leaders or representatives from various industrial associations -- people who are supposedly the most apprised of developments in various business sectors.

Since the government has decided to establish the team any way, concerted efforts should be undertaken to make it as effective a team as possible.

The first order of the day requires President Megawati to make it clear from the outset that the team means real business. This further means that the top priority is to better policy coordination so as to resolve problems in the field as quickly as possible.

The membership of each of the two task forces, therefore, should be formed in such a way so that each task force has the authority and capability to decide on concrete measures to increase export and investment.

Take, for example, the export promotion task force. Its membership should include all representatives from government institutions as well as industry and trade associations directly related to foreign trade -- such as tax and customs offices, distribution services, banks, port authorities and stevedoring companies.

Export is an inter-sectoral economic activity, and is at the end of a long chain of operations starting from the import of materials to port handling, to distribution, processing and shipment. A defect in even one link of the chain could adversely affect the competitiveness of exports from either delayed delivery or higher prices.

Likewise, the investment promotion task force should consist of inter-ministerial representatives authorized to make decisions in their respective areas. Similar to export promotion, investment promotion is influenced by policies in various sectors.

The investment task force should focus on streamlining the investment licensing system and transform it into a one-stop service center, while empowering investment bureaus at the provincial level to address investors' grievances.