Govt 'must act now to up investment'
Govt 'must act now to up investment'
Leony Aurora, The Jakarta Post, Jakarta
The government should not wait for the House of Representatives
to settle their ongoing internal conflict to take measures deemed
crucial to revive foreign investment, an economist and a business
figure said.
Speaking on Monday at a discussion on next year's investment
prospects, noted economist Faisal Basri said the newly installed
administration should concentrate on matters that did not need
the House's stamp of approval, such as revoking or revising
presidential and ministerial decrees that had slowed investment.
"The government can reduce some of the obstacles to investment
with (the creation of) short-term programs," he said.
Meanwhile, National Economic Recovery Committee (KPEN)
chairman Sofyan Wanandi concurred, saying several decrees that
promoted a high-cost economy needed to be revoked.
The discussion was organized by the KPEN, along with the
financial journalists club.
"The government cannot change everything with its first 100-
day program, but at least it can show a clear indication on what
it will do in the future," he said.
Sofyan pointed to a road map for developing industry and
investment, drafted by the Indonesian Chamber of Commerce and
Industry (Kadin), as reference.
The document, Revitalizing Industry and Investment, suggested
a number of bylaws and decrees that needed to be revoked, revised
or drafted by the new government.
James van Zorge, a foreign investment consultant, however,
reminded the discussion that road maps or new laws and
regulations were not the only things needed to attract foreign
investment.
"There has to be a change of mind-sets here," he said.
The previous Megawati Soekarnoputri administration operated
with certain misinformed mind-sets, namely that Indonesia had
abundant resources, great market potential and that the country's
economic situation was not so dire.
"Compared with neighboring countries, Indonesia's performance
is bad," said van Zorge. The government also needed to keep in
mind that the country faced tough competition for foreign
investments from other Asian countries, such as India and China.
He further said Indonesia should take better care of its
"guests", or foreign investors, citing the recent Newmont case,
in which senior foreign executives were imprisoned temporarily
under an unsubstantiated charge of polluting the environment.
"They (foreign investors) won't come to invest if they think
their executives will be thrown into jail," said van Zorge.
Foreign investment in Indonesia has faltered over the past few
years due to various factors, including legal uncertainties,
security fears, labor disputes and poor implementation of
regional autonomy.
The Investment Coordinating Board (BKPM) reported that foreign
investment approvals from January to September 2004 reached
US$7.994 billion, up 23 percent from the same period last year.
However, net foreign investment at the end of 2003 was negative.
Indonesia has been relying heavily on domestic consumption to
fuel economic growth, but analysts have warned repeatedly that
consumption alone would not boost growth to exceed 6 percent a
year, the minimum needed to accommodate the expanding workforce
in the country.
Suggested bylaws/decrees to be revoked, revised or drafted
No. Type Subject Suggested action Reason (if given)
1. Ministerial decree fish-catchment area/equipment revoke --
2. Govt. Regulation No. 40/2001 toll tariffs revise unclear
3. Govt. Regulation No. 82/2001 water quality standards revise
higher than other countries
4. Ministerial decree No. 518/KMK06/2003 value-added tax refund revise --
5. Govt. Regulation No. 144/2000 coal as non-taxable material revise --
6. Bylaws levy, tax, regional fees revoke high-cost economy
7. Bylaw/regental decrees traditional law and forest use draft --
8. Govt. Regulations forestry authority revise --
9. Govt. Regulation No. 20/2002 electricity law draft --
10. Industry/trade ministerial decree No. 360/2004 import procedure
for raw material for PVC revoke --
11. Industry/trade ministerial decree import criteria for new/used cars
revise unclear
12. Presidential decree national tourism body draft --