Government vows to set up crisis investment team

Government vows to set up crisis investment team

Adianto P. Simamora, The Jakarta Post, Jakarta

Apparently shocked by the planned pullout of Japanese
electronic giant Sony Corp., the government vowed on Thursday to
work very hard to solve the various problems faced by the
existing investors to prevent them from leaving the country too.

"Our top priority now is to maintain the existing investors.
We will hear all their complaints and provide solutions as fast
as possible," Theo F Toemion, chairman of the Investment
Coordinating Board (BKPM), told The Jakarta Post.

He said the government would soon establish a special
committee called the National Investment Team, which comprises
all Cabinet members with President Megawati Soekarnoputri as
chairperson.

With the establishment of the committee, the government
expects to be able to address all the problems faced by foreign
investors more quickly and effectively, Theo said.

Today, investors have to file their complaints with several
ministers and the complaints remain unsolved for long periods of
time due to the lack of coordination among ministries.

"In the special team, Ibu Megawati will be directly involved
in addressing investors' problem," Theo said, adding that the
President was really concerned with the country's battered
investment climate and would declare 2003 as Indonesia Investment
Year.

Theo, who has been appointed secretary of the team, said that
any efforts by the government to maintain the existing investors
would not be effective unless all segments of the society took
part in creating a conducive climate for investors to continue
their operations in the country.

Among the protracted problems faced by both foreign and
domestic investors are labor conflicts, high taxes and rampant
smuggling.

Investors have also long been complaining about security
problems, poor implementation of the autonomy law and the absence
of a credible legal system.

These have discouraged new foreign investors from entering the
country, and prompted existing investors to move their operation
to other countries, such as China and Vietnam.

The Oct. 12 Bali bombing and the temporary closure of several
international schools in Jakarta following bomb threats has
further heightened the perception that Indonesia is not a safe
place for expatriate businesspeople or their families.

The bombshell announcement by Sony on Tuesday that it would
close up shop next year has shocked many people and forced some
officials to start thinking about the difficult situations faced
by most investors.

"This is the right time for us to solve their (investors)
problems, we don't want more Sony cases to happen in this
country," Theo said.

Aside from establishing the special team, Theo said, the
government would set up a "one-roof" service to speed up
investment licensing procedures in an attempt to cut down on some
of the bureaucratic congestion currently involved the process.
The service should allow potential investors to get their
licenses within six days.

The government may also offer other incentives to attract new
investors to the country.

"We are considering the provision of incentives, such as
taxes, and equal treatment," he said, but he did not provide
details.

The government is planning to submit a new investment bill to
the House of Representatives for deliberation.

The new investment bill will replace Law No.1/1967 on foreign
investment and Law No.6/1968 on domestic investment. The proposed
bill also aims to ensure equal government treatment to foreign
and domestic investors.

Indonesia badly needs foreign investment to increase economic
growth so that many of the 40 million unemployed workers can
return to work.

However, investment, both foreign and domestic, has continued
to decline over the past several years.

BKPM data shows that foreign direct investment (FDI) approvals
dropped by 11 percent to US$5.4 billion through September of this
year from $6.08 billion in the same period last year.

Domestic investment approvals dropped even steeper by some 70
percent to Rp 15.99 trillion (about $1.6 billion) in the first
three quarters of 2002, from Rp 50.74 trillion in the same period
last year.