Keidanren urges RI to improve investment climate

Keidanren urges RI to improve investment climate

Berni K. Moestafa, The Jakarta Post, Jakarta

Indonesia's largest investor, Japan, renewed calls for the
government to improve the investment climate, reiterating that
fears of a lack of security, unruly labors and legal
uncertainties were preventing the yen from coming here.

Japan's Federation of Economic Corporations (Keidanren) pulled
back under the spotlight of Indonesia's poor investment climate
during its two-day visit to Jakarta last week, according to a
Japanese government official.

"The key message (of Keidanren) was the investment climate,"
First Secretary for trade at the Japanese Embassy Tetsu Fukuoka
told The Jakarta Post on Monday.

Keidanren is Japan's most powerful business lobby -- in a
country that is the largest source of private investment and
official loans to Indonesia.

Led by its chairman Takashi Imai, Keidanren met, among others,
President Megawati Soekarnoputri and the Indonesian Chamber of
Commerce and Industry (Kadin), Fukuoka said.

He said that Keidanren told Indonesia to do more to attract
foreign investment.

This hammers home old concerns that Indonesia is losing slices
of the world's capital flows to neighboring countries.

A 2001 survey by the Japan Bank for International Cooperation
showed that the unfavorable investment climate had cost Indonesia
its status as Japan's number three investment destination.

Die-hard problems include Indonesia's corruption-prone courts,
high security risks, and an increasingly unruly labor movement.

Yet calls to overcome the maladies have subdued, or have been
drowned out by apparent progress in these areas.

The government was hailed for prosecuting several high-profile
graft cases. But critics question whether the moves signaled a
functioning judicial system or a new venue for politicking.

Labor disputes that shocked foreign investors last year are
absent, but have given way instead to mass antiprivatization
protests.

On the security front, no fresh news of armed groups
terrorizing foreign companies' operations reduced fears of
Indonesia's separatism movements, but not their risks.

Overlying all of this is the International Monetary Fund's
positive stance on Indonesia, which has enticed foreign
investment funds to move their capital back into the country.

But news of foreign direct investment, which is a better
indicator of investor confidence, remains scarce.

Fukuoka said Indonesia, and other countries in the region,
must compete with China's growing attractiveness to foreigners.

Analysts also said China's influence within Indonesia had
grown, as more of its products competed hard against Japanese
ones.

In this light, the Keidanren visit to Jakarta may signal that
another wind is blowing in favor of Indonesia.

Businessman Sofjan Wanandi said Japanese investors were
increasingly worried over losing their long-established market
share here to Chinese competitors.

He said most Japanese investors in Indonesia were in the
manufacturing sector, at which the Chinese were getting more
competitive.

"They (the Japanese) are starting to pay more attention to
us," Sofjan, who attended Kadin's meeting with Keidanren, said.

This may be a precursor to further investments here, but
Sofjan said that would come only on the back of an improved
investment climate.