Legal issues make RI unalluring to Japanese businesses

Legal issues make RI unalluring to Japanese businesses

Tony Hotland, The Jakarta Post, Jakarta

Indonesia slipped two notches to the sixth most favorite
investment location for Japanese investors last year with
investment totaling US$1.25 billion, according to a survey of the
Japan Bank for International Cooperation (JBIC), which channels
Japan's Overseas Development Assistance (ODA).

China, Thailand and the United States have remained the top
three most lucrative countries for Japan, while Vietnam and India
took fourth and fifth place respectively, overtaking Indonesia,
which had held fourth position since 2000.

According to the survey, titled Survey Report on Overseas
Business Operations by Japanese Manufacturing Companies --
Outlook for Japanese Foreign Direct Investment, factors
discouraging investment include "the unstable political and
social conditions, the local labor difficulties, as well as the
currency and price instability".

The bank presented the results of the survey to about 50
Japanese businessmen at a hotel in Central Jakarta. Journalists
invited to cover the meeting could not get any information
because the meeting was held in Japanese and no bank official
gave a media briefing.

Only after an Indonesian told the committee to hand out an
English language version of the survey did they finally prepare
one.

The deputy of investment development climate with the
Investment Coordinating Board (BKPM), Yus'an, who also attended
the meeting, told reporters that the declining trend was mainly
caused by poor law enforcement and complicated bureaucracy.

The factors assessed in the survey include the prospect of the
domestic market, labor conditions and the availability of
supporting industries.

Yus'an pointed out that the government was working hard to
improve the investment climate, including the legal side.

According to BKPM statistics, accumulatively Japan has always
been the largest investor in Indonesia, accounting for 9.5
percent of the total foreign investment of US$13.2 billion in the
country last year.

Mauritius was the biggest investor at 22.5 percent with a
total investment of US$2.96 billion. Tanzania and Japan were the
second and third respectively.

Yus'an, however, failed to explain why countries like
Mauritius and Tanzania topped the investment list.

"I wasn't involved in the process of making the statistics,"
he told The Jakarta Post.

Most of the foreign investment in 2003 was in the
transportation and communication sector (31.5 percent), followed
by the chemical and pharmaceutical sector (25 percent). Other top
sectors included the paper and printing industry, and
construction.

Yus'an said the government had been consulting with the
Indonesian Chamber of Commerce and Industry (Kadin) to discuss
how to improve the regulations to meet investor demand and to
improve the investment climate.

"We also need to familiarize foreign investors with our new
laws so that they realize how committed we are," he added.