Political conflict 'no longer scares foreign investors'

JAKARTA (JP): Foreign investors in the manufacturing sector were more concerned about poor security and law enforcement than rivalries among the political elite, an analyst said.

"It (concern) is not about politics, but more about guarantee of security, law enforcement and consistency of investment regulations," Herman Latief, member of the advisory board of the Indonesian Industrial Estate Association (HKI), said on the sidelines of a seminar on prospect of investment in the industrial estate sector.

He said major foreign investors in the industrial estates had told the association they were not worried about the possibility of worsening political situation and had no plans to pull out of the country for that reason.

"That's because they've seen the worst during the 1997/1998 economic and political crisis. No matter what will happen in the political sector, it will not hurt us more," he said.

However, investors are very concerned about the rampant looting on their properties and conflicts over land ownership with locals, not to mention robbery of container trucks during delivery, he said.

Members of the association of electronics manufacturers recently complained about the rampant robberies of container trucks transporting electronics goods from factories to the harbors.

Investors in the forestry and pulp and paper industry have raised concerns with the government over land disputes with locals.

At the Batam Industrial Estate, management said investors in the area were particularly concerned about the government's inconsistency in the implementation of regulations, such as those regarding taxation.

Minister of Investment and State Enterprises Development Rozy Munir, who attended the seminar, acknowledged that his office had received many complaints from foreign investors about poor security, law enforcement and legal protection.

Rozy said one investor, being fed up with the country's lack of law enforcement and uncertain regulations, decided to pull out, while another investor canceled investment plans over the same concerns.

Rozy, however, declined to name the companies.

Despite all the problems, Basroni Rizal, head of foreign affairs of HKI, said industrial estate operators started seeing positive growth in their business.

He said the operators were optimistic about the prospects for their business after seeing that most of the manufacturers had recovered from the impact of the crisis and started boosting output and hired more workers.

Herman, who is a commissioner of Lippo Cikarang Industrial Estate in Lemahabang, Bekasi, said sales of new industrial space had also improved.

"We saw sales increasing in the first quarter," he said, but did not provide details.

There are currently 65 industrial estates across the country accommodating more than 4,570 factories, about half of which are owned by foreign investors and manufacturers, especially Japanese and Korean, such as Sumitomo, Hyundai, Marubeni and Itochu.

Most of the estates, or 43 sites with about 2,100 factories, are located in Jakarta and West Java. (cst)