To attract investment from China

The second week of this month, Bisnis Indonesia journalist Pudji Lestari took the opportunity to participate in the working visit of the Chairman of Indonesia Investment Coordinating Board (Badan Koordinasi Penanaman Modal/BKPM) Gita Irawan Wirjawan to the World Economic Forum on East Asia (WEFEA) in Ho Chi Minh City, Vietnam and the World Expo in Shanghai, China.

The two activities serve as a forum to promote investment opportunities in Indonesia. Here’s the report. For the Head of BKPM Gita Irawan Wirjawan, China is one important country. At least, since serving as head of BKPM about 6 months ago, he was back and forth to the country three times already. During his visit to China this time, the World Expo held in Shanghai became the target of Gita. There, as usual, he held numerous meetings with Chinese businessmen.

In this opportunity, Gita arrange a meeting for local government officials of West Java, East Kalimantan and Riau to meet with Chinese businessmen. A number of infrastructure projects worth trillions of rupiahs were offered in the meeting. In addition to the project, he also offered direct assistance to the businessmen from China’s. He’s willing to be contacted directly, if the prospective investors facing problems in the investment permit process. He realized fraud is often happen in relation with investment affairs. Imron Cotan, the Indonesian Ambassador to China, said foreign investors, particularly from China, it is usually easy to believe in the intermediary business that connects them with local investors. As a result, many do not perform the check and re-check about business locations they seek.

“If there is a KP [mining concession], you should check whether the location are exist or not. If something goes smoothly they said nothing even just to report us, but if they face any problems they complain to us,” he commented on a complaint from a businessman who has disbursed US$ 3 million to fulfil his ambitions for doing nickel business in Sulawesi. Unfortunately, even though the money has been spent, there’s still no clarity in the issuance of business permit.

Deputy Chairman of BKPM Darmawan Djayusman justify. According to him, there is sometimes misplaced. Many entrepreneurs think business investment through the embassy or consulate-general and BKPM will be long-winded process which swallow a lot of cost. “In fact, we give it for free, you see. All we have to do actually is to arrange meeting with local businessmen,” he said with a little promotion about BKPM task.

In addition to matters of fraud, other things that make the Indonesian-Chinese business relations is still not smooth is the fear about the political diplomatic relations between the two countries, which have worsened a few years ago. This reason was also asked by local journalists to Gita. Asean-China free trade agreement has also become a hot topic of lively discussion in a meeting with Chinese businessmen.

Fortunately, the meeting ended with some interest from a number of Chinese companies, namely Shanghai Kaldi Metal Mining Co. Ltd., Sinopec Group, Petrixo Oil Gas, Metallurgy Overseas Corporation of China, and China Harbour Engineering Company Ltd. to invest in Indonesia.

Business certainty
It is clear reason for government, through the BKPM, targeting investment from Chinese investors. Although China not yet the biggest investment contributor to Indonesia, investment flows from the world’s largest population country showed a positive trend. During the first quarter of 2010, investment realization from Chinese investors reach US$ 16.8 million. Investments value from the country ranked at the biggest 11.

Chris Kanter, Vice Chairman of Kadin Indonesia on Investment and Communications Division, acknowledging China became one of the countries targeted by the Indonesian investment together with United States, Europe, and Middle East. According to him, that countries are a source of investment. Along with changing conditions in China – ie, wages and labor costs moving up, and tightening in a number of areas – many foreign investors, including from China begin to look to other countries to relocate their business.

Meanwhile, economist Tim Indonesia Bangkit Ichsanudin Noorsy highlights the low level of certainty in direct investment as the cause of the lack of foreign investment. Less coordination between central, provincial, to the head area/city is one of the source. “As evidence, it is hard for four provinces in Kalimantan just to reach a consensus to build a railways network. That’s what I get from Borneo Summit,” he said.

Ichsanudin assess the regional autonomy policy became another obstacle which complicates coordination. All domestic issues that make him pessimistic about the outcome of the various offshore business visit made by the government in relation to invite foreign investors. Pessimism that is sure to be thrown away by Gita, which was assigned as interpreter in a government campaign to attract foreign investment.

* This is an English version of Menjaring investasi sampai ke negeri China, which published in Bisnis Indonesia, June 23, 2010. Related article: How fuss to sell Indonesia.

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