Foreign investors ask government to cut red tape

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)