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.