Legal uncertainty discourages investors from coming to Jakarta
Novan Iman Santosa, The Jakarta Post, Jakarta
Governor Sutiyoso said on Thursday that as long as the central government continued to fail to provide legal certainty and ensure security, the investment atmosphere in Jakarta would remain gloomy.
Jakarta is expecting total investment of Rp 28.16 trillion (US$3.1 billion) this year, of which Rp 26.32 trillion will be from the private sector, and a growth rate of 4.62 percent.
But, according to data from the City Capital Investment Board, this target may be in jeopardy because the city has only managed to attract foreign investment totaling $191.29 million and Rp 525.47 billion of domestic investment in the first semester of 2002.
Jakarta has seen a steady growth in investment since 1967. It has recorded a total 3,564 foreign investment projects worth $19.88 billion and Rp 70.72 trillion of domestic investment approved, with Japan, Singapore and Hong Kong as the top three foreign investors in Jakarta.
There have, however, been sharp fluctuations following the monetary crisis in 1997.
The situation worsened because many companies had to stop operating because of demonstrations held by workers.
The city administration was not immune from such action, when employees from its tap water company PAM Jaya protested the involvement of two foreign companies, French Lyonnaise des Eaux and Thames Water of England.
Sutiyoso admitted that investors, especially foreign ones, demanded legal certainty and security guarantees before investing here.
"China and Vietnam have provided better security and legal certainty so investors prefer to invest there rather than here," he told participants of a workshop held by the City Capital Investment Board at Twin Plaza Hotel in Tomang, West Jakarta.
"Unless we do something to fix this situation, more investors will run away."
Sutiyoso also urged employers to handle labor disputes with care because there were indications that workers' movements were provoked by certain foreign-funded non-governmental organizations.
Former minister of finance Bambang Sudibyo, who was a speaker at the workshop, agreed with Sutiyoso's suspicion.
"There are more than 48 million job seekers in the country. Trade unions are no longer motivated by economic reasons because, with such a high unemployment rate, workers should realize they would do best to keep their jobs.
"It is not difficult to trace the provocateurs as we all know their political tendencies."
Meanwhile, head of the investment board Hary Sandjojo remained upbeat that investors would come to Jakarta despite current uncertainties.
"Jakarta remains attractive to foreign investors because we have good infrastructure and human resources.
"Jakarta does not have any natural resources. That's why we have to focus on non-polluting, processing industries."
According to Hary, both domestic and foreign investors prioritize manufacturing, the service sector, office and real estate, hotel, construction sectors. There are also investments in livestock, fishing and agriculture.
Hary added his agency would soon set up a one-stop-service center to process all domestic and foreign investment applications.
"I don't have the exact schedule yet, but hopefully the center will be established before the end of this year to anticipate the implementation of the ASEAN Free Trade Area (AFTA)," he told The Jakarta Post.
"Currently, we are still running a pilot project in the Nusantara Bonded Zone (KBN), granting the company the right to issue investment permits within its area."
The Jakarta KBN company, which is part-owned by the city administration, is located in Marunda, North Jakarta and is designated for export-oriented companies.