House calls for concrete steps in undeveloped east

JAKARTA (JP): Members of the House of Representatives urged the government yesterday to accelerate development in the eastern provinces and called on the State Minister of Investment to exercise the "use of force" if necessary.

Soenaryo Haddade, a member of the House Commission VI which oversees industrial, mining and investment affairs, said in a hearing with State Minister of Investment Sanyoto Sastrowardoyo that it was time for the government to take action because "mere goodwill is not enough".

"There needs to be some kind of enforcement to shift industrial development activities from Java, which is already saturated, to regions outside Java," he said.

He suggested that state-owned enterprises and the government spearhead the movement by establishing projects in the eastern provinces and by applying pressure on the private sector.

Since 1990, President Soeharto has been calling for more concerted efforts to accelerate development in eastern provinces. However, the response from the private sector has been lukewarm due to the uphill challenges posed by the backwardness of infrastructures in the provinces.

Sanyoto said yesterday that the government has established an "Eastern Indonesia Development Team" -- headed by President Soeharto and consisting of 14 ministers including Sanyoto -- to step up development in the eastern part of the country. The team's executive chairman is State Minister of Research and Technology B.J. Habibie.

Sanyoto said that a large portion of future development in the eastern region should be conducted by the private sector.

However, Legislator Fransiskus Skera disagreed, saying: "There's no such thing as a 'fighting entrepreneur' now. (The private sector) can only run if sound infrastructure facilities are already provided."

Investment

Approvals for domestic investment in Java alone in 1993-94 reached Rp 35.31 trillion (US$15.6 billion) and for foreign investment US$6.47 billion, while approvals for projects in regions outside Java only totaled Rp 15.21 trillion for domestic investment and $1.56 billion for foreign investment.

For fiscal 1994-95, approvals reached Rp 34.04 trillion for domestic projects and $18.89 billion for foreign projects in Java but only Rp 18.9 trillion and $14.19 billion respectively in regions outside of Java.

Legislator Iskandar Mandji said the eastern region, the major producer of commodities, could only achieve sound development if trade regulations for all the leading commodities are abolished.

"Almost all (leading commodities) started to perish once their trading is regulated," he pointed out, citing the regulations on the clove trade as an example.

Legislators also criticized the unfavorable investment climate in Indonesia that stems from a lack of coordination among government offices.

"It is difficult to expect a conducive investment climate when each ministry is guided by its own egoism and is 'contaminated' by collusion and corruption," Mandji said.

To improve the investment climate there is no need for big businesses to commit themselves to giving special assistance to their smaller counterparts, he said.

"All (the big businesses) have to do is say that they are willing to end monopolies given by the government," he said.

Lack of coordination between government offices, Mandji cited, was apparent when Coordinating Minister for Industry and Trade Hartarto and Sanyoto gave contradicting opinions on the allowable market share of large-scale businesses.

In a recent hearing with House members, Sanyoto said he would not allow the expansion of PT Indofood -- an instant noodle company owned by the Salim Group -- because it held more than 50 percent of the country's market share.

He also said the government was determined to reduce the number of the group's businesses, which range from upstream flour mills to downstream noodle and biscuit industries.

On a separate occasion, however, Hartarto said the expansion was acceptable.(pwn)