Indonesia's Ministers Pledge New Focus On Removing Bottlenecks
Removing policy bottlenecks is key to boosting investment and stimulating economic growth, economics ministers said at the opening of the Indonesian Chamber of Commerce and Industry’s National Summit on Thursday.
Kicking off the summit, President Susilo Bambang Yudhoyono said his administration was hoping to reach a target of Rp 2,100 trillion ($218 billion) in new investment every year, amounting to Rp 10,500 trillion to be pumped into the economy by 2014. He said the extra investment was the key to reaching the annual growth target of 7 percent by 2014.
“We will remove bottlenecks, obstacles in infrastructure, energy and electricity,” Hatta Rajasa, the coordinating minister for the economy, said on the sidelines of the summit.
Hatta said Yudhoyono’s administration had set a number of priority targets: to achieve quality growth, reduce poverty, increase jobs, improve infrastructure and focus on the development of agriculture and industry.
The government was expecting the economy to grow 5.5 percent in 2010, with growth gradually increasing to 7 percent annually by 2014, he said.
As part of efforts to remove policy barriers, Finance Minister Sri Mulyani Indrawati said she was coordinating with Home Affairs Minister Gamawan Fauzi to discuss problematic regional government regulations that were stalling investment. Provincial governors could be given the authority to annul regulations passed at the district and city levels, Sri Mulyani said.
“We are also trying to find a solution to how governors can prevent bad district-level laws from being created in the first place,” she said.
Problematic local government regulations affect almost all business sectors. Unclear and conflicting laws, and delays in receiving local government permits, are the problems most commonly cited by investors. Developing supporting infrastructure was also a key priority.
Industry Minister MS Hidayat proposed that investors be given incentives to invest in local infrastructure projects because regional governments could not afford to pay for important developments.
One important incentive, he said, could be an 8 -to 10-year income tax holiday.
“It happens overseas,” Hidayat noted.
However, he said the idea was unlikely to be included in the government’s first 100-day program.
The summit meeting focused on infrastructure improvements. It resulted in several critical recommendations, mostly focusing on the long-standing problem of land acquisition for public projects.
The need to complete toll-road projects was also discussed, as representatives of state toll-road companies were also inattendance.
“The government should do more to improve this situation,” said Frans Sunito, the president director of toll-road company PT Jasa Marga.
“For example, the government has not been doing a good job of providing land for investors.”
Frans suggested the government issue a regulation in lieu of a law, or perppu, to ensure it could legally acquire private land for public infrastructure projects and compensate the owners. To this end, the older Agrarian Law and laws on land compensation needed to be adjusted so compensation could managed neatly and fairly, he said.
However, Kuntoro Mangkusubroto, the chief of the new presidential unit on investment bottlenecks, said so far the meeting was “for discussion only. Ideas that came up will be drafted and implemented later.”
Kicking off the summit, President Susilo Bambang Yudhoyono said his administration was hoping to reach a target of Rp 2,100 trillion ($218 billion) in new investment every year, amounting to Rp 10,500 trillion to be pumped into the economy by 2014. He said the extra investment was the key to reaching the annual growth target of 7 percent by 2014.
“We will remove bottlenecks, obstacles in infrastructure, energy and electricity,” Hatta Rajasa, the coordinating minister for the economy, said on the sidelines of the summit.
Hatta said Yudhoyono’s administration had set a number of priority targets: to achieve quality growth, reduce poverty, increase jobs, improve infrastructure and focus on the development of agriculture and industry.
The government was expecting the economy to grow 5.5 percent in 2010, with growth gradually increasing to 7 percent annually by 2014, he said.
As part of efforts to remove policy barriers, Finance Minister Sri Mulyani Indrawati said she was coordinating with Home Affairs Minister Gamawan Fauzi to discuss problematic regional government regulations that were stalling investment. Provincial governors could be given the authority to annul regulations passed at the district and city levels, Sri Mulyani said.
“We are also trying to find a solution to how governors can prevent bad district-level laws from being created in the first place,” she said.
Problematic local government regulations affect almost all business sectors. Unclear and conflicting laws, and delays in receiving local government permits, are the problems most commonly cited by investors. Developing supporting infrastructure was also a key priority.
Industry Minister MS Hidayat proposed that investors be given incentives to invest in local infrastructure projects because regional governments could not afford to pay for important developments.
One important incentive, he said, could be an 8 -to 10-year income tax holiday.
“It happens overseas,” Hidayat noted.
However, he said the idea was unlikely to be included in the government’s first 100-day program.
The summit meeting focused on infrastructure improvements. It resulted in several critical recommendations, mostly focusing on the long-standing problem of land acquisition for public projects.
The need to complete toll-road projects was also discussed, as representatives of state toll-road companies were also inattendance.
“The government should do more to improve this situation,” said Frans Sunito, the president director of toll-road company PT Jasa Marga.
“For example, the government has not been doing a good job of providing land for investors.”
Frans suggested the government issue a regulation in lieu of a law, or perppu, to ensure it could legally acquire private land for public infrastructure projects and compensate the owners. To this end, the older Agrarian Law and laws on land compensation needed to be adjusted so compensation could managed neatly and fairly, he said.
However, Kuntoro Mangkusubroto, the chief of the new presidential unit on investment bottlenecks, said so far the meeting was “for discussion only. Ideas that came up will be drafted and implemented later.”