Good signal

Good signal

A number of foreign manufacturers have decided to relocate
their businesses to Indonesia. This is good news for the country,
which is thirsting for foreign capital to spur its economy.

Matsushita Battery Industrial Co. Ltd., for example, has
reportedly decided to relocate its lithium and manganese coin
battery production unit from Japan to Indonesia. The company also
reportedly intends to make Indonesia its production base for its
export market.

Matsushita's decision follows similar ones by Samsung and
Sanex, which have reportedly decided to relocate their production
bases to Indonesia to produce cellular phone handsets.

The presence of world-class manufacturers in Indonesia does
not indicate a conducive investment climate in the country. Yet,
these manufacturers' decisions were based on in-depth market
analysis that indicates Indonesia still holds numerous business
prospects.

These past few years, Indonesia has not been a favorite
destination for foreign direct investment. This is evident in the
country's decreasing competitiveness, according to the World
Competitiveness Report. Indonesia ranked 64th in 2001 in terms of
competitiveness, while its rating dropped to 67th in 2002 and
72nd in 2003.

A lack of legal certainty, poor infrastructure, complicated
labor issues, illegal fees and unstable political conditions are
all responsible for Indonesia's inability to attract foreign
investment.

The government must concentrate on improving these
fundamental issues before inviting investors to the country.

-- Bisnis Indonesia, Jakarta