RI less attractive to Taiwan

RI less attractive to Taiwan

JAKARTA (JP): A Taiwanese economic study illustrates that Indonesia is less attractive for doing business than Malaysia and Thailand.

Tain-Jy Chen, a visiting director of the Chung-Hua Institution for Economic Research, said yesterday that out of the 253 Taiwanese companies established in five Southeast Asian countries since 1960, only 39 were set up in Indonesia, as compared to 62 in Thailand and 123 in Malaysia.

Vietnam attracted 21 while the Philippines only attracted eight of the companies.

According to his study, which was conducted with cooperation from economic research centers in Asia, including Indonesia's Centre for Strategic and International Studies (CSIS), about one third of Taiwanese companies in Southeast Asia have a paid-up capital of between US$1 million and $3 million.

"Indonesia is still more attractive than Vietnam and the Philippines for Taiwanese investors," he said during a seminar at CSIS on Taiwanese investments in Southeast Asia .

Licensing

The CSIS's chief economist, Mari Pangestu, said that Indonesia is less attractive than Malaysia and Thailand partly due to its complicated bureaucracy, which hampers licensing processes.

"The government has introduced a series of deregulatory measures but are very slow in implementing them," she commented.

Mari, who was also involved with the Taiwanese study, said that it takes 14.3 months to complete the documents required for investment projects in Indonesia, as compared to the 11.7 months needed in Malaysia and the 10 months in the Philippines.

She added that it takes 17 months in Thailand and 15 in Vietnam to finalize investment documents.

She suggested that the Indonesian government continue to streamline bureaucratic procedures and improve the enforcement of existing deregulatory measures. "Otherwise, Indonesia will continue to fall behind Malaysia and Thailand," she asserted.

She also said that poor infrastructure was a major complaint lodged by Taiwanese investors when doing business in Indonesia.

The study found that almost 40 percent of the surveyed Taiwanese companies strongly required an improvement in infrastructure and legal certainty in Indonesia to support their operations, she said.

"I believe that the Indonesian government should improve the legal infrastructure to allow for more certainty when doing business here," she said.

Marie added that Indonesia should try to get more investment from Taiwan, considering that Taiwan usually invests in labor intensive small and medium sized businesses overseas.

Because most Indonesian companies are also small it would be easy for them to deal with Taiwanese partners, she concluded.

Taiwan, according to the Investment Coordinating Board, is the seventh biggest foreign investor in Indonesia. It has a total investment commitment of $6.6 billion spread over 327 projects from 1967 to Jan. 31 this year. (fhp)