Investment Sharply Decreases This Year
Friday, 22 December, 2006 | 15:17 WIB

TEMPO Interactive, Jakarta: Investment in Indonesia has sharply decreased this year compared to last year. According to the Head of the Association of Indonesian Entrepreneurs, Sofjan Wanandi, local investment in 2006 dropped 37 percent compared to the previous year. Foreign investment also decreased to 45 percent.

Sofjan said the causes of the decrease include tax settlement, labor, the infrastructure, illegal levies and legal certainty.

The situation has caused bankruptcy in several industries as well as unemployment. This year, Sofjan estimated that the amount of the unemployed reached 1-1.5 million. The number of poor people with less than US$2 income per day totalled 110 million.

If the government does not improve the situation shortly, the situation will continue to occur. “The year 2007 is a crucial time for the government to solve matters on investment,” he said yesterday (12/21) in Jakarta.

The attempt of improvement will not be easy because, Sofyan said, the government will only have a short time until the 2009 General Election so that it will not be possible to issue policies that support investment.

There are three ways that the government can do. In order to absorb workers, Sofjan said, the government should invest in infrastructure. Second: by giving facilities of banking credit to local entrepreneurs in order to stimulate investment. Third: by inviting foreign investors. “However, foreign investment will enter if the first and the second ways are satsfactory,” said Sofjan.

Head of the Indonesian Chamber of Commerce M.S.Hidayat regretted the government's delay, especially on tax holiday regulations. According to him, the government is still reluctant to use the term. “Why don't they postpone income tax and so on,” said Hidayat.

EWO RASWA | RR ARIYANI