Regions face tough challenges to lure investors

Regions face tough challenges to lure investors

Adianto P. Simamora, The Jakarta Post, Jakarta

Efforts by regency and mayoralty administrations to provide
better policy and bureaucracy would not be enough to lure foreign
investors to the regions as many investors were still concerned
with the overall uncertainties plaguing the country, Master P.
Tumanggor, the regent of the Dairy regency in North Sumatra,
said.

"Foreign investors still picture Indonesia as a whole, they
don't differentiate between the conditions in each regency,"
Tumanggor told The Jakarta Post on Tuesday.

"I've just came back from India and Thailand. Investors in the
two countries are still concerned with the overall uncertainty in
this country."

The Dairy regency was given an award by the Regional Autonomy
Watch (KPPOD) for providing the best institutional environment
for investors. Among the positive factors seen in the regency are
investor-friendly government policy, legal certainty and better
bureaucracy compared to those in other regions.

Tumanggor's remarks mean that the central government must also
work hard to resolve the various uncertainties in the country.

The central government has often blamed regional governments
for the sharp decline in investments in the country. Indeed, many
regional administrations, since they obtained autonomy, have been
too aggressive in collecting revenues by squeezing investors.

The government is now moving to revise the policy issued in
1999.

But experts have said that legal uncertainty, inconsistency in
many central government policies and poor implementation of
promised economic reform programs are also creating negative
sentiments among foreign investors.

Roderick Brazier shared Tumanggor's view, saying that many
investors were still watching what was happening in Jakarta
before they decided to enter the country.

But he acknowledged that many provincial or regency
administrations were still unaware of the needs of investors.

He said that a book issued by KPPOD ranking 134 regencies and
mayoralties by their attractiveness for investment should be a
guide for prospective investors. The book is based on a survey
sponsored by the Asia Foundation.

"I hope the (book) would help encourage foreign investors to
look at investment in Kabupaten (regency) by Kabupaten bases not
only just look at Jakarta," Brazier told The Post.

Foreign and domestic investors have long complained of various
problems here including lingering labor conflict, security
problem, poor implementation of regional autonomy and rampant
corruption.

Data from the Investment Coordinating Board (BKPM) shows that
foreign direct investment (FDI) approvals plummeted 35 percent to
US$9.7 billion last year from $15.06 billion in 2001.

The approval in domestic investment dropped even more to Rp
25.26 trillion in 2002, 57 percent lower than Rp 58.62 trillion
the previous year.

Elsewhere, KPPOD also awarded Sawah Lunto regency and Batang
Hari regency in Jambi, second and third place respectively for an
attractive investment center in terms of a better institutional
environment.

But in terms of a combination of social, cultural, political,
and institutional factors, the Semarang mayoralty in Central Java
and Balikpapan city in East Kalimantan are ranked in the top
list.