Japanese investors urge RI to improve business climate
Japanese investors urge RI to improve business climate
Dadan Wijaksana, The Jakarta Post, Jakarta
Japanese investors are joining calls for the government to
improve the business climate here by implementing consistent
legal reforms in various sectors, to prevent more investors from
leaving for other countries.
The Jakarta Japan Club (JJC) and Japan External Trade
Organization (JETRO) said that the country is experiencing
debilitating weaknesses in its legal systems and its enforcement,
saying they were not responsive to the business sector's demands.
Tsutomu Nakagawa, chairman of JJC, pointed out five legal
issues that needed to be addressed immediately, because they had
caused a decline in investor confidence.
"They are tax services, customs procedures, settlement of
labor problems, investment law and law enforcement. The
government should address these to secure foreign investments,"
Nakagawa told a seminar on Friday.
He was speaking on the last day of a two-day APEC symposium on
strengthening the economic legal infrastructure.
Chairman of JETRO Noboru Hatakeyama also acknowledged the same
problems: "Law enforcement has been a major obstacle due to lack
of expertise and human resources. And to establish a system of
professional qualification, a national level examination would be
useful to improve human resources in enforcement."
The remarks were the latest plea coming from investors, whose
confidence has deteriorated rapidly by the unfavorable business
climate, which has cost the country dearly due to a sharp drop in
investment.
Japan has long been one of the largest contributors in terms
of investment in the country.
JJC alone functions as a Japanese Chamber of Commerce and
Industry and covers around 1,000 Japan-affiliated companies and
representative offices that operate in Indonesia.
According to a survey, Indonesia has continued to fall further
behind China and Thailand in the competition for Japanese
investments, and it could be overtaken by Vietnam and India if it
does not take immediate steps to improve its investment climate.
The survey was conducted by the Japan Bank of International
Cooperation (JBIC).
China has become a favorite investment destination for
Japanese investors because its government has been actively
providing various incentives, in addition to the favorable
investment climate and the availability of cheap and high quality
raw materials.
The latest data shows that foreign direct investment (FDI)
approvals in Indonesia during the first five months of the year
experienced an almost 60 percent drop, compared to the same
period the year before.
Regaining foreign investment is absolutely vital for the
recovery of the country's economy.
Analysts have said that while competition among many Asian
countries for Japanese investment had been tight, Indonesia had
done very little to attract Japanese investors.
In the area of taxes and customs, foreign investors have been
the subject of many abuses of irrational interpretations of tax
laws and regulations, Nakagawa said.
"For correct implementation of laws and regulations,
disclosure to the public must be secured. There must be ample
time for disclosure, and also training of officials before
implementation," he added.
Indonesia has also been lagging behind in providing investment
incentive systems, such as tax incentives, compared with other
countries.