Govt must step up investment reforms
Govt must step up investment reforms
Urip Hudiono, The Jakarta Post, Jakarta
With unemployment on the rise due to the recent economic
slowdown, the government must step up reform efforts to attract
more labor-intensive investments into the country, analysts say.
Three classical problems that participants of an investment
workshop on Wednesday still saw as hampering Indonesia's
investment potential were legal uncertainties, too much red tape
and poor infrastructure.
World Bank chief economist for East Asia and the Pacific Homi
Kharas said the government must continue improving the legal
framework to ensure a transparent and fair competitive
environment. If investments continued to be monopolized by only a
few, their economic multiplier effects would be decreased, he
said.
"You can, of course, still attract more investments by
creating monopolies, but it will not spur the expected level of
growth and create the needed amount of jobs," Kharas said.
"The government must then also support the implementation of
that legal framework with an efficient and effective bureaucracy,
(create) certainty of investor rights in the courts and such
issues as labor regulations."
The two-day workshop was organized by the World Bank, the
governments of Indonesia and the Netherlands and attended by
international experts, academics and policy-makers.
On the issue of red-tape, economist Russell Muir of the
International Finance Corporation's Foreign Investment Advisory
Service said although Indonesia was still among the hardest
places in the world to do business-- at 115th from a total of 155
countries surveyed in the World Bank's Doing Business study -- it
had begun to show improvements from last year.
Muir suggested the government cut unnecessary procedures and
create a single-access registration point to cut the average 150
days needed to set up a business here.
Slashing registration fees and scrapping minimum capital
requirements would also cut down investment costs and further
improve the situation, he said.
From the business community, chairman of the Indonesian
Employers Association (Apindo), Sofjan Wanandi, suggested the
government pursue rural infrastructure and agriculture sector
projects to boost investment.
"Investments have risen during the year, but so has
unemployment because most of the (growth was in) capital-
intensive industries," he said.
"These (other) projects, meanwhile, will spur growth and
create jobs, while improving the country's public
infrastructure."
Sofjan said the excesses of bureaucracy and legal uncertainty
meant the country was still seen as a high-cost economy.
The business community wanted the newly proposed tax law
amendments to be implemented as soon as possible because they
were seen as business-friendly, he said.
"If there is further delay, then we will lose the opportunity
and momentum again to attract investments, when we have already
lost it this year due to external factors such as the tsunami,
soaring oil prices, disease outbreaks and terrorist attacks."