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.