Japanese investors need clear message

Japanese investors need clear message

Indonesia is seeking to reschedule some US$5.5 billion of its
sovereign debt maturing this year and in 2003, from the Paris
Club of creditor nations. Japan, the biggest country lender to
Indonesia has indicated its readiness to discuss the issue with
President Megawati Soekarnoputri's government, if Indonesia is
able to meet all the required conditions.

In an interview with The Jakarta Post's Kornelius Purba, Nobuo
Hazeyama, the chief representative of the Japan Bank for
International Cooperation's (JBIC) Jakarta office, shared his
view about Indonesia and the result of the bank's recent survey
on investment in a number of countries including Indonesia. His
office is in charge of overseeing the disbursement of all his
country's official loans to Indonesia.

Question: Finance Minister Boediono has disclosed the
government's intention to reschedule some $5.5 billion of its
loans with the Paris Club this year. What will be Japan's
possible response?

Answer: First, this is a problem between the government of
Indonesia and Japan. However Japan fully understands your
government's situation and is very willing to extend its help. So
I am not pessimistic, although I cannot say I'm optimistic, that
your government will get what it wants. Indonesia is too
important to be ignored. But I think your government must be able
to fulfill tough conditions to get the new concession.

Q: Indonesia and Japan have agreed to revive the four stalled
megaprojects, including Chandra Asri and the Paiton power plant.
Your bank is also involved in financing some of them. What is the
significance of the projects resuming?

A: I do hope this will be a good sign that those projects will
benefit the economy of this country. And still, this is more than
I expect. But only solving old problems would not be convincing
enough for Japanese companies to make new or expanded
investments. That is very sad, and this again indicates the
problem of images and weakening of the economy. To solve the old
problems and think of starting to work ahead are quite important
elements ... Your government can have more self confidence if
they can carry out these projects.

Q: Can these projects be resumed this year?

A: I hope so. Basically they have reached agreements, and this is
the year of implementation.

Q: From your bank's survey we understand there are many
complaints about the lack of transparency, corruption and poor
law enforcements in Indonesia. Can you specify more?

A: It is unfortunate to say that because the current confusion
is accompanied with this transition period some people say that
corruption is worsening compared with before. This is a unique
situation. Of course I don't believe there is no corruption in
other countries, but it is still quite clear that such corruption
cases are decreasing in other countries ... Some people say
corruption is increasing here because there are so many
stakeholders at this moment. Previously there was just one
(ruler), so when someone said yes then it was OK.

But now you have to go to the central government, and then
regional governments. I don't say that this situation adds
corruption -- but you are always asked for some contribution.
Whether it is corruption I do not know, but still it is
additional cost for companies. That is the image.

Q: But how about possible corruption practices in the
disbursement of Japanese official loans to Indonesia?

A: We do not have any problem with corruption, because our
financing system is project by project. When some contractors
make progress, then the consultant will check the quality of the
work and Indonesian government will check it and then talk about
it. So things are exactly according to the contract. Indonesian
government gets quality work, so I don't believe there is the
possibility of corruption with this process.

Q: Corruption has became an old issue in Indonesia, and Japanese
companies have long experiences with this practices. So what is
the confusion?

A: There were clearer rules in the previous governments. We do
not know what the new rules, new regulations are. What is the
relation between the central and regional governments, no one
knows. Worse, your government says something, but some days later
they change it. That happens.

(Indonesia's) transition is very big, even bigger than the
Meiji restoration. So some confusion is quite unavoidable. But it
is really difficult for profit making companies to wait for 10
years to 20 years.

It is important that there will be a clearer message. There
are so many bills which have been presented to your legislature
waiting for decision making. But still the bills are still in
there and we not know when they are to be decided, including the
new investment bill.

(Ours) was a survey study, it is very subjective and not based
on concrete facts or information, and this is more difficult
because the survey is on images. To change an image is very
difficult. If you believe something, how can I change that?
People are looking for a better place for business.

In this transition period there is no clear regulation or
rules matching the new decentralization system. So we are facing
problems. That kind of situation happens now.