Govt drafts development plan for eastern Indonesia

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)."