Korean investors doubt overall situation in Indonesia

By K. Basrie

SEOUL (JP): Like many foreign businesspeople, South Korean investors will not spend their money in Indonesia unless the government improves the current condition of law and order in the country, helps settle labor disputes satisfactorily, and makes crystal-clear regulations on the provincial autonomy policy.

Anton J. Supit, secretary general of the Indonesia-Korea Economic Cooperation Committee (Inkorecom), said here on Tuesday that the three factors have created a nightmare for many Seoul- based businesspeople and investors.

"How could we attract more investors, like those from South Korea, if their friends who already run their businesses in Indonesia want to leave?" he told Jakarta-based reporters on the sidelines of a business dialogue with South Korean businesspeople here.

Anton quoted some South Korean businesspeople and those already grouped in Inkorecom as saying that they are greatly concerned about the state of law enforcement in Indonesia today.

"The police, for example, never arrest those who damage other people's property even though that is obviously a crime.

"Look at Jakarta. Instead of stopping the student brawls and arresting them, the police simply divert the traffic. Where's the law and order, then?

"That's a big question to South Korean businessmen," said Anton, who is also an executive of the National Economic Recovery Committee which was established by the Indonesian Chamber of Commerce and Trade (Kadin).

He also urged Indonesian authorities to differentiate between labor disputes and labor crimes.

"So many laborers have, for instance, burned factories and damaged machines. And police detain nobody. The law even allows police to shoot criminals, doesn't it? Why should we be afraid of human rights abuse if such things really burden us?"

In the provincial autonomy structure set to come into effect as of January next year, South Korean businesspeople repeatedly said that they are seriously worried about the consequences of the policy taking place.

"It's very scary for them. They said the policy remains extremely unclear for them," Anton said.

The Indonesian government, he said, has no choice but to admit that there is a seriously unfavorable climate for foreign investors in Indonesia, which the country badly needs to recover from its economic condition.

"Otherwise, Indonesia will sink," Anton said.

Should such a situation not be improved, South Korean businesspeople, including those who already have businesses in Indonesia, would move to other neighboring countries which can offer a better business climate, such as Thailand or Vietnam.

According to Asril Noer, an expert at the Indonesian State Ministry of State-owned Enterprises, South Korea is the seventh biggest investor in the country after Japan, U.K., Singapore, Taiwan, U.S., and Thailand.

In the first eight months of this year, Indonesia approved 936 projects proposed by South Korean businesspeople, worth US$6.8 billion, which is much lower than the $37.8 billion recorded in pre-crisis 1997, said Asril, a speaker at the meeting which was held in conjunction with the reopening of Garuda's non-stop Jakarta-Seoul flight at the Lotte Hotel here.

During the dialogue, only two South Korean participants among the dozens of attendees were willing to raise questions. They mostly asked about financial matters.

"That's actually a small problem for them. The real obstacles are those three matters (mentioned above), namely law and order enforcement, labor problems, and the autonomy policy," Anton said.

But Seung-Moon Kim, vice president of LG International Corporation, said that he strongly believed many new South Korean business groups would invest in Indonesia once the economic situation improved because Indonesia is still home to skilled laborers and has already adopted an open-economic system.

"Labor disputes are very natural in any country and all over the world in line with significant changes in politics," Kim told The Jakarta Post separately on Tuesday.

Suryo Bambang Sulisto, chairman of the department dealing with the promotion of trade, tourism and investment at the Indonesian Chamber of Commerce and Trade (Kadin), told the business meeting that the biggest difficulty for Indonesia is to woo foreign investors and "to ensure counterparts that Indonesia is safe to visit and invest in" despite the sensational reports of many foreign-based news networks.