Kadin says red tape hindering investment

Kadin says red tape hindering investment

JAKARTA (JP): The Indonesian Chamber of Commerce and Industry
voiced concern yesterday because many investment commitments were
not being realized and non-oil export growth was slowing.

The chamber's chairman, Aburizal Bakrie, said yesterday the
low realization of investment commitments was caused mainly by
red tape, legal and illegal levies and inconsistent policy.

"Businesspeople are more concerned with policy inconsistency,
distortion, arduous licensing and levies rather than the issue of
presidential succession.

"Let's hope that there will be serious efforts (by the
government) to create a conducive climate for investment,"
Aburizal said.

The Investment Coordinating Board revealed recently that 46.4
percent of licensed domestic investment projects and 48.1 percent
of licensed foreign investment projects were being realized.

Aburizal said these below-50-percent rates were "saddening".

He said the investment realization rate would be higher if the
government and the private sector joined forces to address
problems.

"Slow licensing, for instance, especially for large projects
and infrastructure projects, will eventually affect real
investment," Aburizal said.

He said a higher investment-realization rate would help
improve the country's non-oil export performance and maintain its
high economic growth.

Aburizal said he was worried about the slowing growth of non-
oil exports while import growth soared.

The value of non-oil exports rose from US$27.1 billion in 1993
to $30.4 billion in 1994 and $34.9 billion in 1995. Non-oil
imports rose from $26.2 billion in 1993 to $29.6 billion in 1994
and $37.7 billion in 1995.

Aburizal said the lack of a comprehensive industrial policy
and the high-cost economy had been partly responsible for the
non-oil export slowdown.

He suggested the government nurture new products which could
compete in the global market in the long run, while maintaining
special treatment for products with high export value like
textiles and plywood.

"We need to look into products which can compete in the next
10 years rather than sticking to products which are losing ground
like textiles," Aburizal said.

Fadel Muhammad, an executive at the chamber, said the chamber
had identified at least nine product categories which were
expected to remain competitive in the next decade.

They are pulp and paper, edible oil (crude palm oil),
processed edible oil, rubber products, metals, electronics,
telecommunications products and furniture.

Fadel said exports in these categories had grown more than 15
percent in the last five years.

He suggested the government pay more attention to companies
producing these products by providing free training, assistance
for research and development and, if possible, fiscal incentives.
(rid)