Japanese investors
Japanese investors
The outright rebuttal by State Minister of Investment Sanyoto
Sastrowardoyo of Japanese businessmen's complaints about red
tape, import tariffs, customs services and taxation in Indonesia
is understandable.
After all, Sanyoto can support his statement with a very
impressive record of foreign investment approvals over the last
two years. In the first semester alone, total investment
approvals already exceeded US$20 billion, or almost the amount
for the whole of last year.
The Japanese investors' complaints were cited by the Japan
External Trade Organization (Jetro) from a survey of 931 Japanese
investors already operating in Indonesia, Malaysia, Singapore,
the Philippines and Thailand. The survey, conducted last November
and December, was designed to gather the views of Japanese
businessmen regarding the reasons for their operations in those
four countries and any problems they encountered.
Jetro, being responsible for promoting not only Japanese
exports but also investments overseas, has regularly conducted
surveys to gather input on how to further help Japanese investors
and exporters. The November, 1994 survey, for example, was made
to update the data Jetro collected from its previous survey in
1992. Hence, the survey was well intentioned and was not in
anyway aimed at singling out Indonesia as the target for
criticism.
Set against this background, we think it is unwise to simply
disregard the findings of the survey. We should take pride in the
steady increase in licensed foreign investments. That obviously
reflects investor confidence in the prospects of Indonesia's
economy.
But we should also acknowledge that in so far as Indonesia is
concerned, licensed investment is one thing and realized
investment is quite something else. Our balance of payments, for
example, shows that actual direct foreign investments in 1994,
though larger than those in 1993, totaled only $2 billion.
Moreover, the Japanese businessmen's complaints about red
tape, import tariffs, customs services and taxation actually are
not completely new. European and American businessmen in
Indonesia also have often raised similar complaints. In fact,
American businessmen see the way tax officials assess corporate
tax obligations as one of the biggest problems they encounter in
the country. Even Indonesian businessmen, supposed to be more
tolerant about such problems, also have often voiced such
complaints.
True, the packages of reform measures launched since 1985 have
significantly improved the business climate in Indonesia. But
what government officials often do not realize is the fact that
other countries also have been taking such measures and they are
often much better than Indonesia in enforcing the reforms.
We think that instead of rejecting the findings of the Jetro
survey outright, it is perhaps better for Sanyoto and his office
-- the Investment Coordinating Board (BKPM) -- to get a copy of
the complete report on the survey's findings to be used as
valuable input for introspection.
There are several other findings of the survey which could
greatly help the BKPM in further promoting foreign investments in
the country. The survey, for example, reasserts the acute
shortage of middle level managers in Indonesia and discloses that
many Japanese investors look at Indonesia not as an export base
but rather due to the major potential of its domestic market. The
survey also reveals that quite a number of investors are
interested in relocating their plants to Indonesia to take up the
opportunities created by the government ruling on local contents
for various industrial products. These findings and others about
labor wages, incentives, infrastructure and many other issues can
provide valuable input for the BKPM.