Government urged to work harder to regain investor confidence
Government urged to work harder to regain investor confidence
A'an Suryana, Dadan Wijaksana, The Jakarta Post, Jakarta
The government still has plenty of homework to do if it is to
fully regain investor confidence -- necessary to accelerate
economic growth -- otherwise the megaproject relaunch will merely
serve as a marketing gimmick on the part of the government,
analysts have said.
While admitting that the resumption of the strategic projects
would give a boost to the economy, Centre for Strategic and
International Studies (CSIS) economist Pande Radja Silalahi
warned the government against getting preoccupied with this,
thereby jeopardizing efforts toward improving fundamental
problems.
"This will open up the possibility of gaining greater
confidence from investors in times to come, but in order not to
make it pointless, follow-up action is needed so that investors
will pay more intention to the country," Pande told The Jakarta
Post on Thursday.
"The basic thing is that we need investors badly, so we have
to provide them with what they want, which is a positive business
climate, legal certainties, stability, etc."
Pande was commenting on Wednesday's recommencement of 13
megaprojects, worth US$7.63 billion, categorized as fertilizer,
electricity and petrochemical projects, in a move the government
has claimed to be a sign of reviving investor confidence.
Pande disagreed however, arguing that all 13 projects were
mostly old ones, and did not involve much new investment.
According to data provided by the Office of the Coordinating
Minister of the Economy, of the 13 projects, construction in ten
had already been completed and some had even started operational
production.
The remaining projects had either just commenced, such as that
of fertilizer maker PT Pupuk Kujang, or construction had been in
progress. Construction in the expansion project of fertilizer
firm PT ASEAN Aceh Fertilizer was 30 percent complete, while the
petrochemical one at Tuban had reached 60 percent.
The completed projects are mostly for electricity generation,
in the hope that this would enable the country in the future to
increase electricity generating capacity, to keep up with a nine
percent increase in power demand each year.
The story remains the same with petrochemical and fertilizer
projects.
To this extent, Pande agreed, saying, "There is no way we can
accelerate our growth without sufficient power generation
capacity and there is no way we can have higher rice production
without giving farmers cheap fertilizer. This (the projects) will
definitely be beneficial for us in the future."
Meanwhile, Coordinating Minister for the Economy Dorodjatun
Kuntjoro-Jakti said on Thursday the megaprojects would be
followed by another batch of projects, including the development
of toll roads, mining projects and others.
Meanwhile, banking observer Ryan Kiryanto said that the
projects could send signals to foreign investors that the economy
here was just starting to recover from the crisis, which started
in 1997.
However, the attempt to win over foreign confidence could not
succeed as long as there was a lack of confidence in other
supporting, yet fundamental, sectors of the economy such as good
governance, law enforcement and legal certainty.
"... if such a problem is not properly addressed, none of the
PR (public relations) attempts by the government will be
successful," he said.