Legal certainty key for more Japanese investment: Envoy

Adianto P Simamora, The Jakarta Post, Jakarta

The Japanese Ambassador to Indonesia, Yukio Takeuchi, said on Friday the government needs to restore a conducive investment climate, by ensuring legal certainty, if they want to attract more Japanese investors.

"The best way to attract foreign investment is by creating a condition where all foreign companies operating in Indonesia can continue to conduct business in a fair and certain legal environment," Yukio told reporters, at a media conference held by Japanese automaker Honda Motor Co. Ltd. to announce new investment plans here.

The occasion was also attended by Minister of Trade and Industry Rini Soewandhi.

Legal uncertainty, in addition to domestic political and economic woes, has been a factor discouraging foreign investors from entering Indonesia.

Japan is the largest foreign investor in Indonesia.

The Investment Coordinating Board (BKPM) said on Thursday that foreign direct investment approvals dropped sharply by 41.5 percent to US$9.02 billion in 2001.

Meanwhile, Rini admitted that there were still problems causing foreign investors to stay away from the country, but said that the government was determined to resolve them.

"We realize that there is still a negative image of investing in this country, but the government has taken measures to address this problem," Rini said.

Honda Motor Co. managing director Satoshi Toshida expressed confidence that the investment climate in Indonesia would continue to improve over the next year.

"That is one reason, why we have decided to start investing in this country," he told The Jakarta Post.

Honda Motor Co Ltd., Japan's third largest automaker, said on Friday that it would spend US$30 million to build a new car plant in Indonesia.

"We (Honda) are very happy to be here and we will continue to expand our business in this country," Satoshi Okamoto, vice president of PT Honda Prospect Motor, the sole agent for Honda in Indonesia, told The Post.

He said that domestic market demand on automotive products would continue to rise.

The new plant at Karawang, West Java, will start its operations in April 2003 with a total annual production capacity of 40,000 units.

"When it starts operation, the Karawang factory will take over the production of all Honda automobiles in Indonesia," Hiroyuki Yoshino, president and CEO of Honda Motor Co Ltd, told reporters.

A groundbreaking ceremony for the construction of the new Honda plant was held in Kerawang on Thursday.

Honda currently produces passengers vehicles in Indonesia with its joint venture partner, PT Honda Prospect Motor, at a plant in Sunter, North Jakarta, with an annual production capacity of 17,000 units.

Honda Prospect has a 51 percent stake in the joint venture, while the remaining 49 percent is held by Honda Motor Co. Ltd. The share structure is to be reversed later this year, Kusnadi Budiman, the vice president director of Honda Prospect, announced at the same media conference.