Govt drafts development plan for eastern Indonesia

The Jakarta Post, Jakarta

New projects for independent power producers and construction companies might be up for grabs under a government plan to lure investors to the poorer parts of eastern Indonesia.

Coordinating Minister for the Economy Dorodjatun Kuntjoro- Jakti said the plan focused on infrastructure-related projects.

"The strategy is on infrastructure, human resources, electricity, and we expect most of these projects to be handled by the private sector," Dorodjatun told a press briefing on Monday after a Cabinet meeting.

The plan, called the national strategy for the promotion of development in the eastern parts of Indonesia, covers regions like Sulawesi, West Timor and Papua.

The government initiated the plan in June last year and its final draft was presented before President Megawati Soekarnoputri who on Monday approve it, according to Junior Minister for the Acceleration of Development in Eastern Indonesia Manuel Kaisiepo.

Plans to help eastern Indonesia catch up with the western part of the country have existed since the Soeharto era.

However, progress has been slow. Analysts say that the absence of a viable market compared to those in Sumatra and Java as well as poor infrastructure made investment in these regions unattractive.

The new plan will serve as a guideline for ministries and regional provinces in promoting the eastern regions, Manuel said.

"It lays out the regional disparities, identifies the problems and sets targets for 2004 as well as 2010," he explained.

Details of the plan were not available, but the government has put forth several solutions to problems affecting investment in the east.

"There is lack of electricity in these regions that slows down economic growth so we'll try to make use of electricity from private producers," Manuel said.

Dorodjatun, however, indicated that the government might not offer tax holidays to lure investment but was considering other incentives.

Another move was to turn several ports into export hubs, allowing goods to be shipped directly to their export destinations.

To date, Dorodjatun said, the only export hub in the east of the country was Makassar in South Sulawesi. New options include Kupang in West Timor, and Sorong and Biak in Papua.

He added that the government would soon also make a decision about what to do about 22 mining investments worth US$8 billion operating in what had become protected forests in the eastern regions.

"These (investments) will act as a stimulus for development since the main activities in these regions are related to natural resources: fishing, plantations, forestry, mining," he said.

Since Law No. 41/1999 on forestry bans open pit mining in forests, 150 mining companies with investments worth $32 billion have been put in legal limbo.

Dorodjatun said the government and legislatures agreed to solve the problem on a case-by-case basis by a team soon to be formed. "We hope this team will solve the 22 cases soon so that we can go on to the next group (of mining investors)."