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.