RI still faces difficulty raising foreign investment
RI still faces difficulty raising foreign investment
By Kornelius Purba
TOKYO (JP): Indonesia will still face difficulties in
attracting foreign investment next year, especially from Japan,
if political uncertainty and security instability remain, an
official of the powerful Japan External Trade Organization
(JETRO) warned on Tuesday.
Speaking to The Jakarta Post on Tuesday, JETRO researcher on
Indonesia, Hiroto Tsuge, said investors are also likely to opt
for a wait and see attitude before deciding to pour fresh money
into the country, because they want to get a clearer picture on
the implementation of regional autonomy next year.
"In my opinion, investment is increasing gradually, but I am
afraid of decentralization, because under new autonomy laws the
provincial government is allowed to invite investors directly,
not through the central government," said Tsuge, who was asked by
his office to explain the details of the JETRO's 2001 White Paper
on Global Investment to the Post.
According to Tsuge, Japanese investors will continue
increasing operations gradually in Indonesia and bring fresh
investment next year, though many Japanese companies themselves,
are currently struggling with their own financial problems.
With the implementation of regional autonomy, he cited the
provinces in Java, and in Riau, as possibly being the most
attractive for foreign investors because these regions have
sufficient infrastructure, including transportation, water
supplies, electricity, and telecommunications.
The economist, who is a specialist on Indonesia, also warned
that the gap between rich and poor provinces will widen sharply
and will create new difficulties for the government.
"I am afraid that the central government will not be able to
control the provinces," Tsuge noted.
Based on data on the number of approved foreign investments
from January to July this year in Indonesia, Tsuge said that
manufacturing, basic metals and the chemical sectors are likely
to be among the most favored sectors from foreign investors.
When asked about the interests of Japanese companies to
purchase assets and property controlled by the Indonesian Bank
Restructuring Agency (IBRA), the economist said companies are not
enthusiastic about taking over assets due to their own internal
difficulties.
"The companies themselves are struggling with their own
financial problems," he noted.
Separately, Masufumi Ishii, the director of the Second South
East Asia Division of the Foreign Ministry, said that Indonesia
was on the right track in its democratization process and is
undergoing a process of economic recovery.
He appealed to the people and the international community to
be more patient as the country was facing huge problems that
needed to be resolved in the short and medium term.
The diplomat added that the Indonesian people and government
should have more self-confidence and that they are able to rid
themselves of the current hardship despite the complexity of the
problems involved.
The Indonesian economy, both from a macroeconomic and
microeconomic perspective, is showing a recovering trend and it
will continue to grow in the forthcoming years, he noted.
"You cannot escape from short-term problems, you have to live
with them. It takes time to resolve problems as there are no
quick solutions," said Ishii.
Ishii also warned that foreign investors will continue to take
a wait and see position on Indonesia until the government is able
to restore political and security stability, reinforce the law
and create a transparent and clean governance.
"They will only return if you settle their concerns," he
hinted, adding that the Japanese government realizes that
Indonesia needs more time to end the crisis.
Ishii, whose authority includes overseeing Indonesia, also
said that the Indonesian economy is also showing significant
progress, not only because of the sharp increase of oil and gas
prices on the international market, but also due to fundamental
improvements to the economy itself.
Ishii said non-oil and gas exports and domestic demands are
growing rapidly, imports of working capital and the country's
foreign exchange reserves are also increasing. However, the
inflation rate is slower than the Japanese government predicted.
Citing reports from Japanese private companies operating in
Indonesia, he said that the automotive industry is currently
enjoying a boom, as the sales of cars and motorbikes continues
improving.
"The booming sales of motorbikes show that the economic
recovery is touching the middle class," he said.