Govt, Japanese firms discuss investment crisis
Govt, Japanese firms discuss investment crisis
The Jakarta Post, Jakarta
The government and leading Japanese business organization met
on Tuesday to discuss ways of improving the country's difficult
investment climate just as Japan's top electronics producer Sony
Corp announced it would close its Indonesian manufacturing
subsidiary.
The Jakarta Japan Club (JJC) brought together Japanese firms,
the Japan International Cooperating Agency (JICA) and the Japan
External Trade Organization (JETRO) for the meeting with senior
government officials.
"We need to identify problems and seek solutions together so
that Indonesia's investment climate can be improved," said
Coordinating Minister for the Economy Dorodjatun Kuntjoro-Jakti
in a statement on Wednesday.
"The challenge lies in how to overcome the technical problems
that are often encountered by investors," he said.
Tuesday's meeting, however, came at the same time as Japan's
Sony Corp. announced it would cease manufacturing operations in
Indonesia as part of a global strategy to boost efficiency.
Sony's withdrawal, which will entail the laying off of some
1,000 workers, underscores the difficult climate in which
companies have been operating here.
No specific reason was given for Sony's pull-out, but industry
sources pointed to rampant smuggling, an unfavorable tax regime
and an unruly labor movement as the most likely causes for the
decision.
Japanese companies rank among Indonesia's long-time investors
with interests in the manufacturing, service and infrastructure
sectors.
But after the 1997 economic crisis, the investment climate
here took a turn for the worse and more capital has been leaving
the country than coming in since then.
While Indonesia's macroeconomy has stabilized somewhat, old
problems such legal uncertainty, political instability and
security issues continue to cloud investment prospects here.
From January to September of this year, foreign direct
investment (FDI) approvals fell by 11 percent to US$5.4 billion
from $6.08 billion in the same period last year.
Over the same period, domestic investment approvals recorded
an even steeper drop to Rp 15.99 trillion (about $1.77 billion),
down 70 percent from last year's figure.
The regular JJC meetings with the government are aimed at
addressing pressing investment problems. Japanese businessmen
grouped in the JJC meet senior government officials every three
months, with the first meeting being held last January.
The discussions cover investment issues, which have been
assigned to a number of sub-commissions dealing with, among other
things, customs and excise, tax, labor, investment promotion, the
development of component industries, and issues concerning the
power sector.