Kalla pledges better climate, projects to entice investors

Rendi Akhmad Witular and Rita Widiana, The Jakarta Post, Nusa Dua, Bali

Vice President Jusuf Kalla urged foreign investors Monday to return to the country, promising the government would soon take concrete measures to improve the investment climate and offer attractive infrastructure projects.

In his opening address to a group of businesspeople during a two-day investment seminar here, Kalla promoted the country's advantages in terms of abundant energy resources and raw materials.

"Please keep in mind that our country is so rich in resources. This will be an advantage for any industry in developing its business here. China and India have less resources compared to us," the businessman turned politician told the seminar, organized by Euromoney.

He said the government would make energy prices in Indonesia the cheapest in the world by starting to convert some 1,000 megawatts of oil-fueled power plants into gas, coal and geothermal by 2008.

The projects are estimated to cost as much as US$6 billion, with foreign investors encouraged to participate.

"With lower energy prices, we could dramatically slash production costs, which will eventually create business efficiency," he said.

World Bank country director Andrew Steer said that it would be misleading for investors to perceive that Indonesia was headed for another economic recession this year, because the state budget was now at its healthiest condition since the Asian economic crisis began in late 1997.

"For the first time since the crisis, the government is now starting to learn to spend the state budget to fuel its economic growth at a time when the private sector has yet to pick up until the second semester of this year."

Steer said the World Bank remained optimistic that Southeast Asia's largest economy would grow within a range of between 5 percent and 6 percent this year.

Speaking in the same forum, Coordinating Minister for the Economy Boediono also painted a rosy picture of the economic outlook.

Boediono said growth would be "close to 6 percent", and between 6 percent and 7 percent in the next two to three years.

Economic growth accelerated to 5.6 percent last year from 5.1 percent in 2004. Growth of 6 percent would be the fastest growth since 1996.

Boediono said the investment policy packages released in early February should help revive investment activities in the country.

Sheldon Trainor, head of Merrill Lynch's Asia Investment Banking, told The Jakarta Post that Indonesia's macro and micro economic environment outlook was very positive.

"Investors are excited about the current administration's strong leadership in steering the economy," Trainor said. "This will be a great investment year for Indonesia in the regional and international capital market," he said.

Challenges remain, Trainor warned.

"The reform process appears to be moving in the right direction, we do not underestimate the challenges ahead in further reforming the economy and political infrastructure," he noted.

Ralph Parks, chairman of Asia Pacific JP Morgan, also was cautiously optimistic.

"The Indonesian government has adequately launched policies and packages. International investors are now watching closely whether its implementation is in the progress. This is the right time for Indonesia to make real action," Parks said.
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