Sat, 31 Jul 2010


By Cundoko Aprilianto
JAKARTA, July 30 (Xinhua) -- Indonesia must provide good connectivity, infrastructures, energy supply and simplified regulation to attract more foreign investors, an economist told Xinhua in an exclusive interview on Friday.

Sjamsu Rahardja, an economist from the World Bank, said that foreign investors who intend to diversify businesses are eyeing Indonesia as it is considered as a high-growth country with high consumption.

He said that foreign investment in sectors of food, telecommunication and other infrastructures feel that Indonesia promises a very interesting market.

"There a big interest among foreign investors who intend to diversify their business to come to Indonesia, aside of Vietnam," said Rahardja.

However, he said, to accommodate investors to invest in regions, not just in main island of Java, government must create a good connectivity to link various sectors in making process more integrated, which in turn making easy for companies entering Indonesia.

"Currently, only big investors with a huge capital involving in mining or crude palm oil (CPO) industries that could build their own infrastructures in regions to support their business. They are willing to invest in port, road and airport," said Rahardja.

He took an example of coal mining investors who are dare to invest in infrastructures to support their business as they could generate huge result due to good price of coal.

He also said that CPO investors in Sumatra Island are willing to build their own ports as the commodity has a good price.

But, he added, industrial sector investors would not dare to build their own infrastructures as competition is tight enough, posing difficulties for them to make such action.

He said that connectivity will help investors with not too big capital to invest in Indonesia.

"Fixed-cost to provide own infrastructures would be too heavy for them," said Rahardja.

Aside of infrastructure connectivity, he said, Indonesian government must simplify regulation to attract more foreign investors.

"Regulation certainty is what they need. It's not only about government regulation but also include permits related. This is important. Without regulation improvement, all efforts wouldn't be effective. Maybe they still enter Indonesia but they have to provide big money to address the problem. Regulation must be streamlined," he said.

According to Rahardja, there are potential sectors that could not be developed by foreign investors due to uncertain regulation.

"Investors in freight forwarding and courier service are in wait-and-see position, waiting for clearer regulation," he said.

Rahardja also said that energy supply must be well-provided by government.

"It would be funny if we tell investors to come here but they have to supply their own needs," he said.

He concluded that infrastructure, energy, connectivity and good regulation would not only provide benefit for foreign investor but also for domestic ones.