Thu, 10 Jul 2003

Japan urges RI to fix infrastructure

Evi Mariani, The Jakarta Post, Jakarta

The Japanese chamber of commerce and industry, or Keidanren, urged the Indonesian government to improve the country's infrastructure in a bid to help lure more investments amid rising competition, particularly with China.

The demand was among the major points highlighted at the 17th Indonesia-Japan Joint Economic Committee Meeting on Wednesday, in which some 40 Japanese business leaders and members of the Indonesian Chamber of Commerce and Industry (Kadin) participated.

"All the Japanese members (at the meeting) asked the Indonesian side to improve the infrastructure," chairman of Indonesia-Japan Economic Committee (IJEC) Tadashi Okamura, who is also president of electronics giant Toshiba Corp., told a press conference.

President of PT Sumitomo Indonesia and also chairman of the Jakarta Japan Club, Takafumi Sone, said that upgrading infrastructure facilities such as roads, ports and the electricity and communications systems were crucial in helping companies operate efficiently.

"For example, Tanjung Priok (Indonesia's main international port) is very important for Japanese factories here, as they need to export their products made in Indonesia," he said. "For instance, there is a possibility that Toyota here may want to export Kijang (locally made Toyota model) to other countries.

"At the same time, the Japanese government is ready to finance the improvement of the infrastructure facilities."

Japan is the largest foreign investor in the country.

Foreign investments have been declining over the past several years due to a number of reasons such as legal uncertainties, security issues, labor conflicts and poor infrastructure. But while there are signs of improvement in other areas, the cash- strapped government has yet to take measures to improve infrastructure facilities.

Indonesia is facing tough competition with other countries in the region in luring foreign investment, which is crucial to boost annual economic growth to 6 percent. A 6 percent growth rate is needed to help resolve the nationwide unemployment problem. For the past couple years, growth has only been at a meager rate of 3 to 4 percent.

Coordinating Minister for the Economy Dorodjatun Kuntjoro- Jakti, who opened the meeting, acknowledged that improving the infrastructure facilities here was now high on the government agenda.

"Since the economic crisis, Indonesia has been neglecting the development of infrastructure. But the government has now committed more budget allocation toward this," he told reporters.

President Megawati Soekarnoputri is scheduled to relaunch on Thursday a number of huge infrastructure projects stalled during the crisis, including toll road and power projects.

Besides stressing the importance of improving infrastructure, the Japanese businessmen also asked the government to revise the existing labor law and to revise immediately the investment law, which hails from the Dutch colonial era.