Foreign investment in Indonesia
Foreign investment in Indonesia
Minister of Trade Mari E. Pangestu's comments and concerns
with regard to "out of control regional administrations' levies
on foreign investors" (The Jakarta Post of Feb. 14) are to be
commended.
We will, however, wait and see if these words are finally
going to turn into concrete action. Foreign investors have been
patiently waiting six years for Indonesia to change legislation
to attract or keep foreign investors. History, so far, has only
seen lip service paid to this very serious economic obstacle by
previous administrations.
How are regional authorities going to take seriously any
requirement by the central government to stop levies when the
Indonesian government independently levies foreign investors from
every direction? When a foreign investor has to pay between 40
and 70 million rupiah just to register a business in Indonesia
then something is fundamentally wrong. Our closest neighbors like
Vietnam offer free company registration and working visas for
foreign investors.
A yearly fee of Rp 4 million per person for a temporary stay
permit (KITAS) and the contentious work permit for expatriates
(Ikta) fee of US$1,200 per year are not indicators of a foreign
investment friendly government.
On top of all this, now the foreign investor must pay into
Jamsostek for his personal medical insurance and pension. Last
but not least, the much debated fiscal tax to depart from
Indonesia.
So, before the central government looks at cleaning up
regional administration levies it would be prudent to lead by
example by repealing regulations presently strangling foreign
investors. The Indonesian government needs to take into account
the foreigner business culture when spending huge amounts of
money trying to attract foreign direct investment.
The only way foreign investment will flow into Indonesia is
when established foreign investors relay positive sentiments
about the present business environment through the business
grapevine used by potential foreign investors before making
decisions on investing their hard earned capital in the country.
A level playing field is all that is required to reinvigorate
stalled foreign investment and retain those investors who have in
the past supported Indonesia's economy and created much needed
employment.
MARGARETTE HASKELL
Bali