Investment Growth in 2008 Gloomy
Wednesday, 11 April, 2007 | 15:21 WIB

Tempo Interactive, Jakarta: Business groups have stated that investment growth next year will be more difficult compared to in 2007.

The reason for this is that the government will still have to work hard to improve the investment climate in the short-term.

“The government must improve the investment climate, especially in terms of infrastructure supply and policy,” said Sofjan Wanandi, Head of the Association of Indonesian Entrepreneurs, speaking at the Borobudur Hotel, Jakarta, yesterday (04/10).

In addition, according to Sofjan, the government's speed of handling backwardness over other countries with improved investment climates was not satisfying enough.

Improvements to the investment climate must be carried out, especially as regards infrastructure and policies that are considered as not being conducive.

In addition, the need for policy improvement, according to Sofjan, was because there are still many policies that hamper industry and investment.

“For example, multifunction tariffs on electricity that really burden industry as well as the overlaps between central and provincial governments' policies,” he said.

Sofjan said that in order to realize economic growth of 6.3 percent, investment of Rp989 trillion will be required.

Should the government ask the private sector to bear 65 percent of this amount total, then improvements to the investment climate have to be carried out.

“At least half of the Rp500trillion can be met by the private sector. This is already good enough,” he said.

Sofjan added that investment activities were still concentrated around the mining, plantation, property, services and trading sectors.

Faisal Basri, an economist from the University of Indonesia, said that the government was inconsistent in improving the investment climate.

The reason for this was that the government still burdened entrepreneurs with various costs.

“Entrepreneurs who previously invested by building factories in Indonesia are now inclined to transfer their funds abroad because of the high costs,” he said.

Indonesia, he added, was only the source for raw materials whereas processing was done abroad.
“Indonesia should try and become a market for processed products,” said Faisal.

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