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)