INDONESIA EXPECTED TO BOOST DOMESTIC INVESTMENTS

By Andi Abdussalam

Jakarta, Nov 28 (Antara) - The Joko Widodo government is expected to reduce Indonesia's foreign capital dependence and boost domestic investments, which last year accounted for only about 30 percent of the country's total investments.          Businesspersons and economic observers view that to reduce the country's foreign capital dependence, the government should increase domestic investments, particularly in upstream areas where local industries will produce raw materials and thus raw material imports can be reduced.          They have pinned their hopes on Franky Sibarani who has been named chief of the Capital Investment Coordinating Board (BKPM) by President Jokowi. Franky has succeeded Mahendra Siregar who resigned when the term of office of the United Indonesia Cabinet II ended.            "I hope the BKPM will not serve as a mere foreign investment facilitator. It should also serve as an instrument for raising domestic investments. The value of the current domestic investments (PMDN) accounts for only 30 percent. We hope local investments will exceed foreign capital investments (PMA) in 2019, or at least it will account for 50 percent, that is, 50 percent for PMDN and 50 percent for PMA," Ahmad Erani Yustika, the executive director of the Institute for Development of Economic and Finance (Indef), said on Thursday night.          Based on a BKPM data, foreign investments in various sectors in 2013 reached Rp398.6 trillion while domestic investments stood at Rp117.7 trillion, or only about 29.55 percent.          Therefore, Franky, who is a former secretary general of the Indonesian Employers' Association (Apindo), is expected to boost domestic investments in an effort to reduce the country's dependence on foreign capital.          According to Ahmad, Franky will do the job well as he has earned enough experience as secretary general of the Indonesia Food and Beverage Association (Gapmmi).          The new BKPM chief should also be able to facilitate investments in medium- and small-scale businesses or investors who have not been maximally accommodated so far.          "Medium- and small-scale businesses are badly in need of investments, which are not open at Apindo. We have to increase our sensitivity toward the country's medium and small businesses. We should not develop only large-scale ones," Ahmad argued.          The new BKPM chief is also expected to increase investment opportunities outside Java Island. While areas outside Java have huge investment potentials, Java is still a favorite investment destination among investors.          "BKPM must begin looking beyond Java. As campaigns are carried out to enhance infrastructure development in regions, BKPM should think of it. Investment scale can be larger outside Java," said Ahmad, who is also an economics professor at the Economic Faculty of the Brawijaya University.          Sofyan Wanandi, the Apindo general chairman, concurred with the opinion of the Indef executive director.          He emphasized that the government should not only boost large-scale investments but must also embrace local small and medium businesses (UKM), so that they can grow.          "For instance, mergers with foreign UKMs to boost domestic UKMs through promoting their products must be encouraged. The number of our UKMs is huge at around 95 percent. I think it is applicable. So, we must not only think of large investments but small ones as well," he affirmed.          "He (Franky) must be able to convince businessmen to increase their domestic investments," Sofyan Wandandi remarked on Thursday.          He stressed the government must boost domestic investments as currently, it accounts for only 30 percent of the country's total investment.          Under its new chief Franky Sibarani, BKPM must boost investments in upstream industry to produce raw materials and reduce imports.          "Most of our raw materials are still imported. We want upstream industries and component industries to be involved here. They could be provided with incentives so that there will no longer be any imports," Sofjan Wanandi added.          He stated that the BKPM chief should sort out all future investments in Indonesia and give priority to local industries producing raw materials.          "We want to receive as much investments as possible, but we also hope that investments will not always be made in the same sectors. We should remember that in the coming five years, we should be able to produce both raw materials and finished goods.  We should no longer produce goods from imported raw materials," Sofjan observed.          Based on the directives of President Joko Widodo, BKPM is expected to carry out improvements and licensing simplification so that barriers in investments and implementation of projects can be removed.          In line with the directives, Franky has pledged to create a favorable investment climate starting from his institution.          "Previously, I created good investment climate outside. Now, I will improve the investment climate in BKPM through simple, fast, transparent, and integrated permit procedures," Franky remarked on Thursday.          Franky had been the director of PT Garuda Food and had been active in the Indonesian Employers' Association and Indonesia Food and Beverage Association.          As a businessman, he had criticized the government's policies earlier. "All this time, I was active in the business world, fighting from the outside. Now, we will build from within," he said.***2*** (T.A014/INE) EDITED BY INE (T.A014/A/BESSR/A. Abdussalam) 28-11-2014 22:57: