Words won't lure investors

Kornelius Purba, Staff Writer, The Jakarta Post, Jakarta, korpur@yahoo.com

Recently, the growing beard of Japanese envoy Yutaka Iimura gave the impression among Indonesians that he probably had a nadar (vow) -- that he would not shave until he succeeded in convincing President Megawati Soekarnoputri that Japanese investors would continue to flee from Indonesia, unless she took extraordinary economic policies to woo back investment from the world's second most powerful economy after the United States.

According to one of his aides, the ambassador had to shave his beard when he made a business trip to Tokyo, but he started regrowing the beard upon his return to Jakarta. His vow might have led him to grow the beard even longer until he could have been mistaken for a Taliban member -- while he witnessed the clumsy progress made by the President and her Cabinet to restore the chaotic investment climate, and the hardening attitude of the Indonesian Military (TNI) top brass on Aceh.

"He looks handsome with his beard," said a Japanese banker on Tuesday, who then pointed out that many Japanese companies had nearly lost hope regarding the government's seriousness in regaining the trust of foreign investors. Last year, the total value of Japanese investment was only US$300 million, and mostly from small scale enterprises, such as the suppliers of automobile spare parts.

Japan is accumulatively the biggest money lender to Indonesia and its private sector is also the biggest investor, while Japan is also the biggest importer of Indonesian products.

Some American and British businessmen expressed their surprise when they saw how the usually reserved Japanese executives bluntly told Indonesian ministers that the government should stop giving empty promises and instead issue concrete measures for private corporations.

Their critical view is also shared by other foreign businessmen and at least one envoy from a neighboring country. Many foreign companies have abandoned Indonesia, while many others have decided to stay because they have invested too much here, and are just waiting for a miracle.

The investors' complaints included rampant corruption, workers' demands, uncontrollable regional autonomy, taxation problems, complicated and vicious custom and excise system, and the greediness of political parties.

But how could President Megawati convince foreign investors to expand their business to Indonesia when they could not even understand her message to them? Her address to them last month was in the Indonesian language.

Also, could the Cabinet expect foreign companies to pour fresh money to Indonesia, when key economic ministers like Coordinating Minister for the Economy Dorodjatun Kuntjoro-Jakti and Minister of Finance Boediono were absent from an event where the foreign business circle expected a major announcement from the government?

An Asian businessman, who was invited along with other 300 foreign business executives, to the official launching of Invest in Indonesia Year 2003 at Istana Merdeka late last month, described his frustration because the President only used Bahasa Indonesia in her speech, with no English translation.

It was more upsetting when he realized that the only concrete result of the ceremony was the signing of the first stamp to mark the year of investment by the President.

"We are really disappointed, it was just a waste of time," said the businessman, who had hoped that Megawati would announce some new tax incentives, or that they would have the opportunity to have a dialog with the President or her ministers, an opportunity often available with former presidents B.J. Habibie and Abdurrahman Wahid.

But the guests only heard the President's old song -- "We need to keep improving our economic basics to create a good investment climate."

The President has visited at least 27 countries and of course, the state has spent millions of US dollars for her travel expenses, as she believes her psychical presence in those countries is very effective to lure foreign investment. However, it is very difficult for Investment Coordinating Board (BKPM) chairman Theo F. Toemion to back this up with concrete investment data.

Foreign direct investment (FDI) continues to decline. FDI approvals -- excluding those in the energy and financial sectors -- plunged by 35 percent to US$9.7 billion last year from $15.06 billion in 2001.

Concurrently, domestic investment approvals has nose-dived 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.

The problem is that the Cabinet has only been busy making public statements without concrete policies to convince investors. In response to severe criticism over the allegedly crooked Customs and Excise Office, the President only replaced its chief, and the old system remains -- it has not been changed into a pre-shipment system as demanded by many.

The labor issue is likely the most crucial for the private sector. Investors believe the increase in wages should also be in line with rising productivity.

The President may think investors will come soon to Indonesia after launching Invest in Indonesia Year 2003, and Dorodjatun feels confident after making lengthy speeches in various fora.

But as to the measures which should be taken, "There are hundreds of things that can be done very quickly to improve the situation," said World Bank country director for Indonesia Andrew Steer about investment in Indonesia.