Foreign investors ask government to cut red tape
JAKARTA (JP): Foreign investors called on Thursday for the government to further streamline investment procedures to help attract more investment into the ailing economy.
Agus Alwi from the hypermarket giant PT Carrefour Indonesia, said that complicated investment licensing had so far been one of the reasons that deterred foreign investors from entering the country.
"To open a new hypermarket, for instance, we have to obtain about 20 licenses from various institutions," he said at a breakfast meeting between investors and the new head of the Investment Coordinating Board (BKPM), Theo F. Toemion.
Agus said that the complicated procedures for obtaining licenses were exacerbated by the various hidden costs that were associated with the official procedures.
"Various under-the-table payments go hand in hand with the official procedures, and that's not good for your investment image," he added.
Businesses have long complained about the convoluted bureaucratic procedures they face when investing in Indonesia.
On Wednesday, the BKPM said that approved foreign direct investment (FDI) in the first semester of this year jumped by 113.2 percent to US$4.96 billion compared to the same period last year. But it is not clear how much of the promised investment was actually realized by investors.
Experts have said that the red-tape problem has been one of the factors discouraging investors from putting their money in Indonesia.
PT Samsung Electronics Indonesia's general manager for marketing Lee Kang Hyung said that besides lavishing attention on new investors, the government should also take heed of the needs of existing investors wishing to expand their businesses in the country.
He cited many occasions when plans for expansion in Indonesia by the South Korean electronics manufacturer were thwarted by the lack of incentives.
The breakfast meeting was the first gathering with investors presided over by Theo since his installment as head of the BKPM in June. The post had been vacant for almost a year since the BKPM lost its state-ministry status.
The meeting was attended by about 400 local and foreign investors.
Investors also decried the additional licenses that they now had to obtain from regional administrations as the result of the implementation of the regional autonomy law.
An executive from mining firm PT Newmont Minahasa Raya said that the new licenses were mostly an excuse for regional administrations to generate income.
The BKPM's loss of its state ministry status, as well as the implementation of the regional autonomy law, have rendered the board's policies ineffective, local businessman Yusuf Merukh said.
"They (regents) simply ignore the BKPM licenses ... this situation slows down investment projects in the regions," he complained.
Investors view the change from the Abdurrahman Wahid administration to a government led by Megawati Soekarnoputri as a ray of hope for a strengthened BKPM role as investment coordinator, and for a better investment climate.
Investment expert James Castle of the CastleAsia Group said the new government should make clear its expectations concerning the role of foreign investors.
"There has been confusion of policies; at senior levels the statements have been positive but the actions of the junior officials have been very anti-investment," Castle told reporters.
He added that many regulations lacked transparency and coordination with other ministries and institutions such as the BKPM.
Theo vowed to strengthen the role of the board by converting the BKPM from a merely regulatory body to that of a market-driven servicing agency.
He said that as an initial measure, the BKPM would focus its attention on the needs of existing investors rather than aggressively trying to attract new investors.
"I think it would be more effective if potential investors in Indonesia are drawn to the country by word of mouth, based on the comments of our existing investors. In this way they get proof rather than mere promises," Theo said.
He urged existing investors to provide inputs for the BKPM and report their grievances so that they could be forwarded to the appropriate ministries.(tnt/bkm)