Govt vows to improve investment climate

The Jakarta Post

The government is planning a new policy package that aims to improve the domestic investment climate, according to Coordinating Minister for the Economy Boediono.

He said that higher investment was crucial to help boost economic growth and create employment.

"There will be a new policy package to improve the investment climate," he was quoted by Antara on Thursday. He did not elaborate.

The administration of President Susilo Bambang Yudhoyono has targeted for average economic growth of 6.6 percent per year from 2005 until 2009. Experts have said that to achieve the target, the government needs to boost investment.

But investors have been reticent about the Indonesia due to a variety of problems including massive red tape, corruption, legal uncertainty, security concerns and poor infrastructure.

Finance Minister Sri Mulyani on Wednesday said that her office was planning a new ruling that would prevent local administrations from imposing too many levies and local taxes on the business sector, a move that also aims to improve the investment climate.

Many investors have long complained that local administrations, after obtaining greater autonomy power in 2001, have been too aggressive in attempting to collect revenue by creating new taxes and levies, which in turn has created a burden on businesses.

Investors have also long complained about policies issued by local governments that were detrimental to investment activities.

The country's economy expanded by 5.6 percent in 2005, higher than the rate in the previous year, but still lower than the government's target of 6 percent. Growth was mainly driven by domestic consumption, with investment remaining weak.

Investment growth last year slowed to 9.93 percent from 15.71 percent in 2004.

The Investment Coordinating Board (BKPM) estimated investment this year to grow by 21 percent to Rp 139 trillion (US$14.94 billion) from Rp 115 trillion last year.

Commenting on the 2005 economic growth data, Boediono said that it was quite a positive result considering that the country had to deal with various pressing problems during the year, including the tsunami disaster and the sudden surge in oil prices.

"Compared to the growth in other neighboring countries, our's is still higher," he said.
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