Investment in Indonesia’s Papua Province a Hard Sell
Despite the presence of heavyweight investors, many of those attending “Papua Investment Day” at the Four Seasons Hotel in Jakarta on Thursday said they didn’t expect too much to come out of the conference. Among the reasons cited were the lack of infrastructure and tax incentives as well as the chaotic business licensing system in the two easternmost provinces.
Agus Martowardojo, the president director of event organizer PT Bank Mandiri, acknowledged that it was difficult to attract investors due to a lack of infrastructure in Papua and West Papua, and that state enterprises had a duty to help pioneer infrastructure development in the region.
“We could lend Rp 8 trillion to Rp 10 trillion [$848 million to $1.06 billion] if the demand was there,” Agus said, adding that Mandiri had Rp 800 billion in outstanding commercial loans in the two provinces.
Papua Governor Barnabas Suebu said much more would be needed to develop the economy in the Indonesian half of New Guinea Island.
“We would need around Rp 200 trillion to develop decent infrastructure in Papua,” Barnabas said. “Around 50 percent of that figure is needed for the construction of roads and other land-transportation infrastructure.”
He said that in contrast, Papua and West Papua provinces only received between Rp 1 trillion and Rp 2 trillion a year from the central government for infrastructure development. “We’re really lacking in funds. We have to depend solely on the central government. The private sector doesn’t want to invest in infrastructure because it’s expensive and takes a long time to reach the break-even point, let alone realize a profit,” he said.
Public Works Minister Djoko Kirmanto acknowledged that the two provinces had to rely excessively on Jakarta. He said that to attract investors, the central government needed to offer more incentives, such as tax breaks and more streamlined business licensing procedures.
Barnabas added, “One thing that is certain now in Indonesia is the uncertainty. We need to make things certain in Papua.”
Abraham Atururi, the governor of West Papua, said he had no illusions about how much new investment Thursday’s event would bring to Papua. He pinned the blame for this partly on the tardiness of central government institutions in issuing business licenses and permits.
Existing investors, such as palm-oil giant Sinar Mas Group and oil and gas firm PT Medco International, said the incentives are not enough to attract business.
“The licensing process in Merauke and Manokwari is pretty messed up, especially in the forestry and fisheries sectors. It’s not good,” said Arifin Panigoro, the founder of the Medco Group.
Agus Martowardojo, the president director of event organizer PT Bank Mandiri, acknowledged that it was difficult to attract investors due to a lack of infrastructure in Papua and West Papua, and that state enterprises had a duty to help pioneer infrastructure development in the region.
“We could lend Rp 8 trillion to Rp 10 trillion [$848 million to $1.06 billion] if the demand was there,” Agus said, adding that Mandiri had Rp 800 billion in outstanding commercial loans in the two provinces.
Papua Governor Barnabas Suebu said much more would be needed to develop the economy in the Indonesian half of New Guinea Island.
“We would need around Rp 200 trillion to develop decent infrastructure in Papua,” Barnabas said. “Around 50 percent of that figure is needed for the construction of roads and other land-transportation infrastructure.”
He said that in contrast, Papua and West Papua provinces only received between Rp 1 trillion and Rp 2 trillion a year from the central government for infrastructure development. “We’re really lacking in funds. We have to depend solely on the central government. The private sector doesn’t want to invest in infrastructure because it’s expensive and takes a long time to reach the break-even point, let alone realize a profit,” he said.
Public Works Minister Djoko Kirmanto acknowledged that the two provinces had to rely excessively on Jakarta. He said that to attract investors, the central government needed to offer more incentives, such as tax breaks and more streamlined business licensing procedures.
Barnabas added, “One thing that is certain now in Indonesia is the uncertainty. We need to make things certain in Papua.”
Abraham Atururi, the governor of West Papua, said he had no illusions about how much new investment Thursday’s event would bring to Papua. He pinned the blame for this partly on the tardiness of central government institutions in issuing business licenses and permits.
Existing investors, such as palm-oil giant Sinar Mas Group and oil and gas firm PT Medco International, said the incentives are not enough to attract business.
“The licensing process in Merauke and Manokwari is pretty messed up, especially in the forestry and fisheries sectors. It’s not good,” said Arifin Panigoro, the founder of the Medco Group.