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