SBY told to scrap high-cost economy
SBY told to scrap high-cost economy
Ridwan Max Sijabat, The Jakarta Post, Jakarta
The likely president-elect Susilo Bambang Yudhoyono must uphold
legal certainty and security, and phase out the high-cost economy
to encourage investment and create jobs, investors and employers
say.
They said the next government must work to restore security
and guarantee legal certainty if it wishes to attract foreign
investment.
Indonesian Employers Association secretary-general Djimanto
said Indonesia was no longer a major destination for foreign
investors due to legal uncertainty, security problems, rampant
illegal fees and a complicated and corrupt bureaucracy.
He said direct foreign investment in Indonesia had slumped in
the first semester of 2004 from the same period in 2003, because
the country was no longer considered an attractive investment
destination.
"Many foreign companies have suspended investment in Indonesia
because of legal uncertainty and security problems, including
terror attacks. Worse, many investors have pulled out of the
country because of the high-cost economy, which has left them
unable to compete with other countries' products," he said.
Apart from legal certainty and security, the next president
will also have to deal with the country's poor infrastructure
"Repair all damaged the infrastructure in the regions,
otherwise more investors will relocate their investments to other
countries, causing more layoffs," Djimanto said.
In the latest World Investment Report, Indonesia was ranked
138th out of 164 investment destinations across the globe. The
absence of security and legal certainty, damaged infrastructure
and a high-cost economy were cited as the reasons for Indonesia's
lack of competitiveness compared to other Asian countries.
Former manpower minister Bomer Pasaribu said Indonesia should
follow the lead of Vietnam, which has become more competitive
than Indonesia in attracting investment by maintaining security
and legal certainty, developing its infrastructure and providing
incentives for foreign investors.
He said the pledges made by Susilo during the election
campaign were a political contract that he had to implement.
In outlining his economic program during the campaign, Susilo
said he wanted to develop a employment-friendly economic policy
to help resolve the problem of unemployment.
Almost 10 million people nationwide are unemployed, while 35
million are underemployed, meaning they work less than 35 hours
per week.
Bomer said Susilo and his Cabinet had to design a new manpower
plan that was investment-friendly and encouraged people to create
small and medium-sized companies to create more jobs.
Susilo's government will need to raise economic growth to 7
percent annually in order to create about 17,500 jobs annually.
If that works, unemployment could be solved within five years.
"But it is impossible for this to occur under such poor
political, social and economic conditions," Bomer said.
Djimanto and Bomer were both of the opinion that besides
attracting more foreign investors, the next government must
develop the informal sector, especially the agricultural sector,
spur labor exports and create more development projects that are
financed by the state budget.