Foreign investors 'need level playing fields'

Riyadi Suparno, The Jakarta Post/Jakarta

Harassing foreign investors is never a good thing, moreover in times of a poor investment climate. The best advice would probably be to offer fair treatment and a level playing field.

According to U.S. Treasury Assistant Secretary Randal K. Quarles, the protracted battle between the government and Karaha Bodas Company over the former's compensation payment to the latter, and between the police and PT Newmont Minahasa over alleged pollution by the latter, could send wrong signals to investors in general and deter their return.

"They are all causing concerns. I think these sorts of issues are deterring investment in Indonesia, and these are the sorts of things that need to be addressed," Quarles told journalists here.

When asked if he raised Newmont and Karaha Bodas cases during their meeting with Indonesian officials, Quarles said: "As examples, we raised some specific issues that raised concerns. But, it's not the topic of any of our meetings."

Not only those cases, Quarles said, investors were also deterred by other issues such as high-profile and unfavorable court decisions, corruption, conflicting regulations, and tax administration issues.

"If foreign investors are to begin investing in Indonesia again," Quarles said, "they are going to have to be confident that they will face a level-playing field, a level playing field in judiciary, in regulatory systems and in general availability in business opportunities."

Bringing back investors to Indonesia was a challenge for the new government, Quarles said, noting that foreign investment was badly needed to bring economic growth back to the pre-crisis levels.

Indonesia has been suffering negative foreign investment since the crisis, meaning that there has been more capital outflows than inflows into the country.

During his visit here, Quarles met with Bank Indonesia governor Burhanudin Abdullah, Finance Minister Yusuf Anwar, Minister of National Development Planning Sri Mulyani Indrawati and members of the House of Representatives' Commission XI on finance and banking.

Quarles commended efforts by the new government to review conflicting regulations between the center and local governments and reduce bureaucratic obstacles, which could be the first step in addressing Indonesia's bleak investment picture.

"We look forward to the government continuing to dedicate its full energy to all aspects of improving the investment climate so that it will succeed," he said.