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European investors see promising opportunities in the
infrastructure sector here, but say that lack of legal certainty
remains a major problem.
"We have a lot of companies that have expressed their commitment and
interest, but they are waiting for the laws (to be reformed)," European
Business Chamber of Commerce in Indonesia (EuroCham) deputy chairman
Michael Olsson told The Jakarta Post on the sidelines of the signing of
a cooperation agreement Thursday with the Indonesian Chamber of
Commerce and Industry (Kadin).
"New companies that want to come here are a little bit afraid because
there is a lot of laws being mangled in the parliament," he added.
In the agreement, the two business chambers stated their commitment to
fostering cooperation in developing infrastructure projects in
Indonesia.
Under the agreement, the chambers also agreed on the need to establish
a special forum through which Indonesian and EU companies could access
the latest information on the regulatory reform process and decisions
pertaining to the infrastructure projects on offer.
The forum, to be financed by the European Commission, will also provide
training workshops on business opportunities in Indonesia.
The European companies are interested in taking part in infrastructure
projects in the telecommunications, water treatment, transportation and
power generation sectors.
"Europe is very keen on telecommunications," Olsson said, adding they
were also ready to compete with China in tendering for power-plant
projects in Indonesia.
During last year's infrastructure exhibition, the government offered 10
infrastructure projects involving the construction of new power plants,
expressways, seaports, municipal water systems and telecommunications
facilities worth an estimated US$4.5 billion.
The projects, which are supposed to serve as models for high-quality
international business cooperation, include the constructions of the
"Palapa Ring" fiber-optic network, a 1,200 megawatt coal-fired power
plant in Central Java, a 500 MW coal-and-oil-fired power plant in
Pasuruan, East Java, and two water projects in Bandung, West Java, and
Dumai, East Kalimantan.
Coordinating Minister for the Economy Budiono said he strongly
supported the initiative by EuroCham and Kadin, adding that the
government would continue to increase private sector participation in
infrastructure provision.
"We want the private sector, as well as SOEs, to be the main drivers of
infrastructure projects in the future," he said during the signing of
the agreement
The government had annulled 18 regulations deemed to be out of line
with the Infrastructure Policy Package as part of the effort to reform
the legal framework, he said, adding that the package, which consists
of 156 regulations, is aimed at enhancing infrastructure development in
Indonesia.
Kadin chairman M.S. Hidayat said a number of representatives of major
European companies would visit Indonesia in April to take a closer look
at the infrastructure potential here.
He said that the forum to be established by Kadin and EuroCham would
closely monitor the progress of the government's legal reform program.
"With this forum, we have a channel to talk to the private sector.
We've been working with the government all the time and we always try
to talk with the legislature. Now, besides talking to them, we would
also like to talk to the industry," Olsson explained.
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