RI promises to attract investment, lacks action

RI promises to attract investment, lacks action

Adianto P. Simamora, The Jakarta Post, Jakarta

Officially launching the Invest in Indonesia Year 2003, President
Megawati Soekarnoputri pledged on Thursday to improve the
investment climate to woo foreign investors to help improve the
battered economy and create jobs.

Megawati, however, failed to outline measures to address
investors' concerns on security, legal certainty and law
enforcement.

"We have to admit, we really need their (investors)
presence ... not just to improve the economy but also to create
jobs," Megawati told representatives of foreign and domestic
investors at Merdeka Palace on Thursday.

"We need to keep improving our economic basics to create a
good investment climate," she added.

Harvey Goldstein, president director of PT Harvest
International Indonesia which promotes investment in Indonesia to
foreign investors, hailed Megawati's promise.

"We are very pleased. Ibu Megawati is surely committed and
fully understands the challenges facing Indonesia at this time,"
he told The Jakarta Post.

Local businessman TP Rachmat agreed but warned that the
government needed to address security issues, which have become
investors' main concern.

"Investors will come if our country is safe," he said.

Indonesia needs to attract new investments, both from domestic
and foreign sources, to help meet its target of 4 percent
economic growth this year and create jobs for more than 40
million unemployed people.

Data at the Investment Coordinating Board (BKPM) show that
foreign direct investment (FDI) has continued to decline since
the country plunged into economic and political crises.

FDI approvals -- excluding those in the energy and financial
sectors -- plummeted by 35 percent to US$9.7 billion last year
from $15.06 billion in 2001.

Meanwhile, domestic investment approvals dropped even more to
Rp 25.26 trillion (US$2.8 billion) in 2002, 57 percent lower than
the Rp 58.62 trillion in the previous year.

Lingering legal and security uncertainties, compounded by
complicated labor issues and poor implementation of the Autonomy
Law, are among the pressing problems discouraging investors from
investing in Indonesia.

Earlier this week, the House of Representatives approved the
labor bill, which is expected to give more certainty in labor
issues.

In a bid to reduce the impacts of decentralization, BKPM
chairman Theo F. Toemion signed on Thursday memorandums of
understanding with governors across the country to avoid the
issuance of contradicting regulations.

"We want to ensure that local governments do not issue
regulations contravening those issued by the central government,"
he said.

The government also plans to establish the National Investment
Team to find ways to attract investment.

The team will comprise several ministers, including the three
coordinating ministers, and Megawati as chairwoman.

Aside from the team, the government also plans to set up a
under-one-roof service unit to speed up investment licensing and
avoid bureaucratic hassles.

The government also plans to submit the investment bill to the
House to give more legal protection for foreign investment in the
country.

Unless these plans are carried out fully, they will soon
become redundant, experts have said.

Andrew Steer, the World Bank's country director here, urged
the government to move faster.

"There are hundreds of things that can be done very quickly to
improve the situation, and I think the investment team offers a
very good hope," he said.